Oof, every VC goes who has made many fintech bets
Visa and plaid This afternoon closed its agreement, ending the consumer credit giant’s acquisition of a data-focused FinTech API startup.
The deal was worth $ 5.3 billion at the time of this announcement, the first time cover was broken for the day on January 13, 2020, or nearly a year ago. However, the US Department of Justice sued in November 2020 to block the deal, arguing that the combination would end “a nascent competitive threat that results in substantial savings and more innovative online debit services for merchants and consumers” Will happen.”
Visa at the time argued that the government’s approach was “flawed”.
However, today both companies confirmed that the deal was officially closed. In a release, Visa wrote that it could eventually execute the deal, but the “lengthy and complex litigation” would take a long time to resolve.
It all became very difficult, in other words.
Plaid was somewhat more upbeat in its own notes, writing that in the past year it has “seen an unprecedented increase in demand for services operated by Plaid.” Looking at the fintech boom by 2020, as consumers vied for the free stock trading app and NeoBank, that plaid saw the growth last year is not surprising; Ultimately, Plaid’s product sits between consumers and fintech companies, so if those parties are executing more transactions, API startups saw greater demand for their own offerings.
ClearTips reached out to Plaid to comment on its plans as an independent company, also asking how fast it grew during 2020.
While the visa-plaid deal was only a single transaction, its scouring does not bode well for other fintech startups and unicorns who may opt out of a wealthy incumbent. The Justice Department may, in other words, reduce the likelihood of M & A exits for many Fintech-focused startups – or at least cause more lethargy around that potential exit path.
If so, the expected exit price for fintech upstart may decline. And it can end both fintech-focused venture capital activity, and the price at which startups in the niche can raise money. If the visa-plaid deal was a big boon for fintech companies, which used it as a signpost to help raise funds in new, higher valuations, the reversal could also be vindicated.