Fintech company Plaid has raised approximately $575 million in common stock, valuing the company at $6.1 billion post-money, a significant decrease from its previous valuation of $13.4 billion in April 2021. The company confirmed the news to TechCrunch, attributing the decrease to the contraction of multiples across the market due to higher interest rates.

Despite the valuation drop, Plaid's new valuation is still 15% higher than the $5.3 billion Visa was willing to pay for the company before the acquisition deal fell apart in January 2021 due to regulatory concerns. A spokesperson for Plaid emphasized that the company is "well-capitalized" and remains on track to go public, although no specific timeline has been set.

The funding round was led by Franklin Templeton, with participation from new investors Fidelity Management and Research, BlackRock, and others, as well as existing investors NEA and Ribbit Capital. The transaction is characterized as a sale of common stock, which involves the company directly issuing new shares to raise capital, rather than a secondary share sale.

The proceeds from the round will be used to address employee tax withholding obligations related to the conversion of expiring restricted stock units (RSUs) to shares, as well as to offer some liquidity to its current team via an employee tender offer. CEO and co-founder Zach Perret explained in a blog post that the majority of the secondary sale will go towards the conversion of RSUs that will be expiring in the coming years.

The funding comes on the heels of a record-setting year for Plaid, with revenue growth exceeding 25% in 2024 and the company approaching sustained profitability. Perret also highlighted that new products represented more than 20% of Plaid's annual recurring revenue (ARR) in 2024, compounding at 93% annually.

Founded in 2012, Plaid has expanded its offerings beyond connecting consumer bank accounts to financial applications, now including lending, identity verification, credit reporting, anti-fraud, and payments. This diversification has led to traction beyond traditional fintech customers, with enterprise and traditional financial institution growth starting to outpace the rest of its business.

Plaid counts major companies such as Citi, Robinhood, H&R Block, Invitation Homes, GoFundMe, Zillow, and Rocket as key customers, and has raised approximately $1.3 billion in funding over its lifetime. The company currently has 1,200 employees across the United States, Canada, the United Kingdom, and the EU.

As Plaid continues to grow and expand its offerings, its eventual IPO will be closely watched by the fintech industry. With its sights set on building software that makes the financial system easier and better for everyone, Plaid is poised to play a significant role in shaping the future of financial technology.