Plaid allows employee share sales at $8 billion valuation

Plaid, a 13-year-old company that connects financial applications to users’ bank accounts to enable payments and data verification, has allowed its employees to sell some of their shares at an $8 billion valuation. The company confirmed the transaction to TechCrunch on Thursday.

The $8 billion valuation represents a 31% increase from the $6.1 billion valuation the company achieved in April of last year. In April of last year, Plaid raised a $575 million funding round led by the investment firm Franklin Templeton. That previous funding round was raised for partly the same purpose: purchasing shares from employees, including to help them cover the taxes associated with converting expiring restricted stock units (RSUs)—which are a form of equity compensation—into shares.

Despite its new, bigger headline number, Plaid is still valued at 40% below its peak valuation of $13.4 billion, which it reached in 2021. During that period in 2021, ultra-low interest rates drove a massive surge in fintech valuations.

Transactions like this are increasingly used by private companies as a retention tool and to help staff cover tax bills triggered when RSUs vest. Plaid joins a growing list of private companies that have recently allowed employees to sell shares. Recent examples of companies offering these liquidity opportunities to their staff include:

• Stripe, which recently stated it would allow employees to sell shares at a $159 billion valuation
• Clay, which has also allowed employee share sales
• ElevenLabs, which has also allowed employee share sales
• Linear, which has also allowed employee share sales

Why it matters

Beyond employee retention and helping staff cover tax bills triggered when RSUs vest, these liquidity events relieve pressure on company management to pursue an Initial Public Offering (IPO) before the business is ready.