The Middleware for Fintechs

Plaid has built a widely adopted abstraction layer that provides seamless integration between financial applications, banks, and other financial service providers, Acting as an intermediary between the growing field of finance apps, Plaid functions as an essential connection layer for developers of financial apps to interface with banks on behalf of their end customers.

Plaid was built for developers — its modern APIs and clean documentation were a dream come true for the fintech developers who drove innovation in financial infrastructure and product development in the mid-2010s.

Furthermore, Plaid is capitalizing on the trend of embedded finance — where nonfinancial companies integrate financial products directly into their platforms.

Plaid has broadened its product portfolio beyond its core connectivity layer, offering solutions across payments, fraud and compliance, financial data analysis, credit underwriting, and open finance. In January 2022, Plaid entered the identity verification market with the acquisition of Cognito.

With over 100 million users, Plaid connects more than 8,000 apps and services to over 12,000 financial institutions across 17 countries. In the US, one in three adults has used Plaid’s customer onboarding flow (including myself, through Coinbase and Robinhood).

In 2020, Visa announced a $5.3B acquisition of Plaid, but the deal was blocked after the DOJ filed an antitrust lawsuit, arguing that Visa sought to eliminate a competitive threat to its debit business.

Plaid has raised $822M in total funding from leading VCs — including Kleiner Perkins, Andreessen Horowitz, Index Ventures, Ribbit Capital, and NEA — as well as major financial institutions such as JPMorgan, Goldman Sachs, Citi, Amex, Visa, and Mastercard. Its most recent Series D round in 2021 valued the company at $13.4B.

Conclusion

Driven by the overall growth and increasing complexity of the fintech ecosystem — and the rapid expansion of embedded finance in particular — Plaid is well-positioned to benefit from strong market tailwinds. As the first mover in financial middleware, it has built competitive moats by connecting a vast network of financial institutions and fintech applications, solidifying its market leadership in open banking and financial data connectivity with $400M in ARR.

Now, it is a Fabrica Ventures portfolio company.