Most companies could be disappointed if the massive $ 5.3bn build-up of their business by a company like Visa is halted. But for Plaid workers, it was almost like a cause for celebration.
On January 12 as the news broke, Plaid employees were seen sharing memes on social media outlining their joy at the expiry of the contract. “Is Plaid starting again? There was always, ”said one of them, and another showed himself lying on the floor with the tongue caption:“ Smiling through it all! I don’t think this is my life. ”
“It is clear and encouraging to get back to owning our destiny,” said Keith Grose, Plaid’s international chief executive. Fintech Files after the news.
“The right decision now was for us to share ways. But fundamentally, what it means to us is the importance of Europe – and the importance of our results of launching here – just on the rise. We are back to being a startup and being a company on our own. ”
Plaid, which helps companies connect to their customers ’bank accounts, uses the concept of open banking to facilitate the sharing of banking data between lenders and consumers.
Open banking as a regulatory regime has progressed particularly well in the UK and Europe, prompting Plaid with its US headquarters to expand significantly in the region. Grose said the start-up scheme plans to double its population across its London and Amsterdam offices by 2021, rising to around 100 people across both centers.
“I think now that we’re going back to being a starting point, we’re making our own decisions. We can be as energetic as we want to be, ”said Grose.
“Over the last year when everyone went to work from home and fintech adoption saw this explosion as everyone was going to pay online banking and online for the first time, many of our customers wanted open banking payments, so we actually made a big move in Europe to focus on open banking payments as our main offering.
“Now heading into 2021 and going back to being a stand-alone company, it has just increased its focus on being successful in that place for us.”
On the outside, looking inside
Even if the decision to postpone the purchase would be agreed by both Plaid and Visa, outsiders seem to agree that it is a far more appropriate product. towards starting fortunes.
Pinar Ozcan, professor of entrepreneurship and innovation at Oxford Said Business School, said Plaid technology had great potential as an emerging competitor and a threat to the Visa industry. But when considered the other way around, Visa had less to offer – especially when U.S. regulators tried to stop the deal from going ahead.
“The fact that Plaid has attracted the interest of a business giant, Visa, in itself is a testament to the competitive and innovative potential that such fintechs create through mutually beneficial solutions,” she said. “Regulators’ comments on the construction news show how, as key market decision-makers, they see fintechs as strategic players ensuring innovation and competition in a marketplace. traditional, non-stop. ”
In addition to eliminating a competitor, the construction of Plaid would have brought great benefits to Visa in working out of this traditional environment.
“Although the network (and therefore the data access capability) of Visa is larger than the Plaid network; the ability to extract views from data where fintechs like Plaid are much better, ”said Ozcan. “Thus, with this purchase, Visa would be able to both eliminate an emerging threat and enhance existing services with core data solutions. ”
Back in the future
Looking ahead, Ozcan said Visa’s interest has also made Plaid much more attractive to future investors. She expected that we would now see the start as a “attractive target for growth equity investors, IPO banks and SPAC supporters” to name a few.
Indeed, regulatory intervention on a contract that placed a $ 5.3bn price tag on Plaid could have boosted initial valuation for future investments, given its potential to disrupt the market through buying makes it very valuable. And with their customers largely made up of fintech companies that have thrived during the pandemic, such as Robinhood, Venmo and SoFi, Plaid’s future is a start-up born again looking very clear.
“I think what everyone is happy about is being sure,” Grose said. “I think there’s a lot of uncertainty involved in processes as you go through acquiring property or raising money or anything like that. And so surely, now that we are alone again, our destiny is ours. I think it just brings a lot of clarity and removes this cloud that you are thinking of in the back of your head. ”
Further reading
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To contact the author of this story with feedback or news, email Emily Nicolle