Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Yesterday, we spoke with Plaid CEO and co-founder Zach Perret after news broke that Visa no longer plans to buy his company for $ 5.3 billion.

The deal was heralded in early 2020 as a sign of the growing importance of fintech startups. Then it failed to close, eventually running into a lawsuit from the U.S. Department of Justice. A few months later, the acquisition was dropped.

Sentiment in the market changed since the transaction was announced. As TechCrunch reported yesterday, there’s a good deal of optimism to be found amongst investors and others that Plaid will eventually be worth more than the price at which the Visa deal valued it.

What follows is a summary of our conversation with Perret, digging into a number of topics we felt most were pressing in the wake of Plaid’s unshackling.

Now what?

First and upfront: it does not appear that Plaid is racing to the public markets via a blank-check company, or SPAC, a question several readers asked on Twitter. Our impression from our chat regarding near-term liquidity via the public markets is that those with their hopes up have them up a few years too early.

TechCrunch asked Perret how it feels to be free from his erstwhile corporate boss.

He said that the last few years have been a “rollercoaster,” adding that when they made the choice to sell, it made sense at the time from mission, and delivery perspectives — Visa wanted to accomplish similar things and could give his company access to a wide network of potential customers.

Startups – TechCrunch

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries. How will this new process work?

— Positive in Palo Alto

Dear Positive:

Thanks for your timely question! The Department of Homeland Security (DHS), which oversees U.S. Citizenship and Immigration Services (USCIS), finalized a new rule last week (Jan. 8), that replaces the random H-1B lottery with a pay-to-play system. There may be litigation that could change things before this year’s selection process, but interestingly, removing the randomness from the H-1B lottery is one point on which both Biden and Trump agree.

To find out more about all the changes that will impact this year’s H-1B process and how to prepare, register for our upcoming webinar on Jan. 20, on how to Get Ready for the H-1B FY2022 Lottery. In the meantime, listen to my recent H-1B podcast in which I discuss what the 2021 lottery will look like, and download our free H-1B guide. Also, check out the podcast episode on What Makes a Strong H-1B Petition.

Under this new wage-based H-1B allocation system, which is slated to go into effect on March 9, USCIS will select H-1B registrants based on the highest relative wages paid, taking into account the job, where it will be done and the job level (think of it like a career stage). This change is aimed at encouraging employers to offer higher salaries and higher-skilled positions to H-1B candidates to better protect the wages and working conditions of U.S. workers and increase the likelihood that H-1B visas will be awarded to the best and the brightest individuals. In a nutshell, this is great news for Silicon Valley companies that have cash and need to remove risk.

While the new rule substantially increases predictability in the “lottery” process, it may make it more difficult for companies that are unfunded, pre-revenue early-stage startups to get H-1B visas for founders or employees, particularly since other forms of compensation, such as equity or stock options, are not considered wages. So the lesson here is to get some predictable revenue or runway prior to Q2 when you need to submit the I-129 petition so you can demonstrate the “ability to pay” at a higher wage level.

Startups – TechCrunch

Visa will not acquire Plaid after running into regulatory wall

Visa and Plaid called off their agreement this afternoon, ending the consumer credit giant’s takeover of the data-focused fintech API startup.

The deal, valued at $ 5.3 billion at the time of its announcement, first broke cover on January 13, 2020, or nearly one year ago to the day. However, the Department of Justice filed suit to block the deal in November of 2020, arguing that the combination would “eliminate a nascent competitive threat that would likely result in substantial savings and more innovative online debit services for merchants and consumers.”

At the time Visa argued that the government’s point of view was “flawed.”

However, today the two companies confirmed the deal is officially off. In a release Visa wrote that it could have eventually executed the deal, but that “protracted and complex litigation” would take lots of time to sort out.

It all got too hard, in other words.

Plaid was a bit more upbeat in its own notes, writing that in the last year it has seen “an unprecedented uptick in demand for the services powered by Plaid.” Given the fintech boom that 2020 saw, as consumers flocked to free stock trading apps and neobanks, that Plaid saw growth last year is not surprising. After all, Plaid’s product sits between consumers and fintech companies, so if those parties were executing more transactions, the API startup likely saw more demand for its own offerings.

TechCrunch reached out to Plaid for comment on its plans as an independent company, also asking how quickly it grew during 2020. Update: Plaid responded to TechCrunch noting that it saw 60% customer growth in 2020, bringing it to more than 4,000 clients. If we presume even moderate net dollar retention amongst its customer base, Plaid could have grown by triple-digits last year, in percentage terms.

While the Visa-Plaid deal was merely a single transaction, its scuttling doesn’t bode well for other fintech startups and unicorns that might have eyed an exit to a wealthy incumbent. The Department of Justice, in other words, may have undercut the chances of M&A exits for a number of fintech-focused startups or at least created more skittishness around that possible exit path.

If so, expected exit valuations for fintech upstarts could fall. And that could ding both fintech-focused venture capital activity, and the price at which startups in the niche can raise funds. If the Visa-Plaid deal was a huge boon to fintech companies that used it as a signpost to help raise money at new, higher valuations, the inverse may also prove true.

Startups – TechCrunch

Fintech predictions for 2021: Visa, Mastercard, to acquire Nigerian fintech giants – Techpoint Africa

Fintech predictions for 2021: Visa, Mastercard, to acquire Nigerian fintech giants  Techpoint Africa
“nigeria startups when:7d” – Google News

Tech talent visa sees 48% increase in applications over one year as global founders look to the UK – Global Banking And Finance Review

Tech talent visa sees 48% increase in applications over one year as global founders look to the UK  Global Banking And Finance Review
“nigeria startups when:7d” – Google News

Amazon’s Bezos invest in African fintech; Visa, Conferma Pay launch B2B services – PaymentsSource

Amazon’s Bezos invest in African fintech; Visa, Conferma Pay launch B2B services  PaymentsSource
“nigeria startups when:7d” – Google News

Wallets Africa Partners VISA to Offer Customers Alternative Payments through Physical Cards – Technext

Wallets Africa Partners VISA to Offer Customers Alternative Payments through Physical Cards  Technext
“nigeria startups when:7d” – Google News