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Most businesses could be disappointed if the major $ 5.3 billion acquisition of their business by a company like Visa were canceled. But to the staff at Plaid, it almost seemed like a party.
On January 12, when the news broke, Plaid employees were seen sharing memes on social media describing their joy at the deal ending. “Is Plaid a startup again? It always has been, ”one said, while another appeared lying on the floor with the tongue-in-cheek caption:“ Smile through it all! I can’t believe this is my life.
“It’s clarity and excitement to take back control of our own destiny,” said Keith Grose, Global Head of Plaid. Fintech files following the announcement.
“It was the right decision now for us to go our separate ways. But basically what that means to us is the importance of Europe – and the importance of our product launches here – is simply increased. We have become a startup and an autonomous company again. “
Plaid, which helps businesses connect to their users’ bank accounts, uses the concept of open banking to facilitate the sharing of bank data between lenders and consumers.
Open banking as a regulatory regime has taken off particularly well in the UK and Europe, prompting US-headquartered Plaid to grow strongly in the region. Grose said the startup plans to double its workforce at its London and Amsterdam offices in 2021, to around 100 people at both bases.
“I think now we’re back to being a startup, we’re making our own decisions. We can be as agile as we want, ”said Grose.
“Over the past year, when everyone went to work from home and the adoption of fintech saw this explosion as everyone went to online banking and online payments for the first time. Many of our clients once requested open bank payments, and we made a big shift in Europe to focus on open bank payments as our core offering.
“Now entering 2021 and becoming a standalone business again, it just focused more on being successful in this space for us.”
Outside, look
Even though the decision to roll back the acquisition was mutually accepted by Plaid and Visa, outsiders seem to agree that this is a result much more suited to the startup’s fortunes.
Pinar Ozcan, professor of entrepreneurship and innovation at Oxford Said Business School, said Plaid’s technology has great potential as an emerging competitor and threat to Visa’s business. But looking the other way around, Visa didn’t have as much to offer – especially as U.S. regulators tried to prevent the deal from going through.
“The fact that Plaid has sparked the interest of an industry giant, Visa, is in itself an indicator of the competitive and innovative potential these fintechs are creating through solutions that benefit society,” she said. . “Regulators’ reactions to acquisition news show how they, as key market decision-makers, view fintechs as strategic players ensuring innovation and competition in a traditional and stagnant market.
In addition to eliminating a competitor, the acquisition of Plaid would have offered Visa major advantages in getting out of this traditionalist environment.
“Even though Visa’s network (and therefore data access potential) is greater than that of Plaid; the ability to extract insight from data is where fintechs like Plaid are much more superior, ”added Ozcan. “Therefore, with this acquisition, Visa would be able to both eliminate an emerging threat and complement its existing services with data-centric solutions.”
Back to the future
Looking ahead, Ozcan said Visa’s interest has also made Plaid much more attractive to future investors. She predicted that we could now see the startup become “an attractive target for growth equity investors, IPOs and SPAC sponsors,” to name a few.
Indeed, regulatory intervention on a deal that placed a price of $ 5.3 billion on Plaid could have increased the startup’s valuation for future investments, as its ability to disrupt the market through an acquisition makes it very valuable. . And since its clients are largely made up of fintech companies that exploded during the pandemic, such as Robinhood, Venmo, and SoFi, Plaid’s future as a born-again startup looks pretty bright.
“I think what gets everyone excited is having certainty,” said Grose. “I think there is an incredible amount of uncertainty involved in the processes when you go through acquisitions or fundraising or something like that. And so, having the certainty, now we are autonomous again, we have our own destiny. I think it gives a lot of clarity and removes that cloud you think about in the back of your head.
Further reading
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To contact the author of this story with comments or news, email Emily Nicolle
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