Plaid, a company that connects financial applications to users' bank accounts to enable payments and data verification, has allowed employees to sell a portion of their stock at a valuation of $8 billion, the company confirmed to TechCrunch on Thursday.
The valuation represents a 31% increase from the $6.1 billion valuation the 13-year-old company achieved last April. At that time, the company raised $575 million in a round led by Franklin Templeton, in part for the same purpose. The purpose is to purchase stock from employees, including to cover taxes associated with converting expired restricted stock units (RSUs, a type of stock compensation) into stock.
Despite the big new headline numbers, Plaid's valuation is still 40% below its $13.4 billion peak in 2021, when ultra-low interest rates and fintech valuations soared.
Such transactions are becoming increasingly common among private companies that use liquidity as a retention tool. Recent examples include Stripe, which this week announced it would allow employees to sell stock at a valuation of $159 billion, as well as Clay, Eleven Labs, and Linear.
In addition to retention, helping your staff cover the taxes that arise when RSUs vest takes the pressure off management to pursue an IPO before the company is ready.