Visa will not acquire Plaid after running into regulatory wall – TechCrunch

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.

Deal, It was valued at $ 5.3 billion at the time of its announcement, First broke cover for the day, January 13, 2020 or nearly a year ago. However, the Department of Justice Sued to block the deal in November of 2020, Arguing that the combination would “eliminate a nascent competitive threat that would result in substantial savings and more innovative online debit services for merchants and consumers.”

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 it would take a lot of time to resolve “complex and complex litigation”.

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.” Given Fintech boom that was seen in 2020, As consumers have done for the free stock trading app and NeoBank, Plaid noticed the increase over the past year is not surprising. Ultimately, Plaid’s product sits between consumers and fintech companies, so if those parties were executing more transactions, API startups saw greater demand for their own offerings.

TechCrunch reached out to Plaid to comment on its plans as an independent company, also asking how fast it grew during 2020. Update: Plaid responded to TechCrunch that it saw 60% customer growth in 2020, bringing it to more than 4,000 customers. If we also consider modest dollar retention among our subscriber base, plaid could grow by triple digits in percentage points last year.

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 possibility of M&A exit for fintech-focused startups around several possible avenues or at least create more skills.

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.