When Plaid Inc.’s co-founders were starting out in their early 20s, they hid their graduation dates on their LinkedIn profiles to avoid scaring off potential investors who might have been wary about their youth.
As fortune would have it, the relative lack of experience didn’t hold them back.
This week Zach Perret, 32, and William Hockey, 30, announced the sale of their company to Visa Inc. for $5.3 billion, making them the latest founders to join Silicon Valley’s increasingly youthful roster of fintech tycoons.
The pair met while they were working as consultants for Bain & Co. They began incubating the idea of more easily connecting apps to bank accounts in 2012 while living in New York. Once the idea started to take off and they needed more employees and funding, they relocated to Silicon Valley, the tech capital. By late 2018, Plaid had garnered a valuation of $2.65 billion.
The firm now has more than 200 million accounts linked on its platform, according to an investor presentation. About 25% of people with U.S. bank accounts have used Plaid to connect to the roughly 11,000 financial institutions it works with, according to a statement Monday announcing the deal. Visa’s purchase will help the payments processor — which largely connects banks and merchants — to also link banks to financial startups that now have millions of customers.
The idea wasn’t always so popular with investors.
Dozens of venture capitalists snubbed the Plaid founders. Money was so tight that Hockey was sleeping on a friend’s couch while Perret moved in with a girlfriend. They finally got a yes from Spark Capital, which led Plaid’s first big funding round.
While the size of the duo’s holdings in Plaid hasn’t been disclosed, they’ll probably reap hundreds of millions of dollars — at least — from the sale, which the companies expect to be completed within three to six months. The deal — most of it in cash — makes Hockey and Perret among the most successful fintech founders in the Bay Area.
The pair didn’t merely get lucky exiting at such a high valuation, said Rick Yang, a general partner at New Enterprise Associates, an early investor in Plaid.
“I don’t think this is a one-off,” he said. “You have a lot of traditional financial institutions that are starting to think about: What is our software strategy? How do we stay relevant? How do we continue growing like a software company?”
Hockey and Perret join an already youthful cohort. In May 2018, Robinhood Markets Inc. co-founders Vlad Tenev and Baiju Bhatt — then 31 and 33, respectively — became billionaires thanks to the soaring valuation of their electronic stock brokerage. Last year, Stripe Inc.’s John Collison, 29, and brother Patrick Collison, 31, became Ireland’s richest entrepreneurs with an estimated net worth of $4.2 billion apiece after their online payments processor was valued at $35 billion.
Still, those tech founders are practically middle-aged compared with Brex Inc.’s Henrique Dubugras, 23, and Pedro Franceschi, 22. Their startup was valued at $2.6 billion last year, giving each a net worth of about $425 million, according to calculations by Bloomberg.
This article provided by Bloomberg News.
