A number of well-known venture firms are getting behind Plaid, a startup that describes itself as “the modern API for banking data.”
The company is announcing that it has raised $2.8 million led by Spark Capital, with participation from Google Ventures, New Enterprise Associates, Felicis Ventures, and Homebrew Capital (the new seed fund from former Googlers Hunter Walk and Satya Patel).
Co-founder Zach Perret told me via email that the team’s goal is to make it easier for developers to build financial applications: “As developers in financial technology ourselves, we struggled with the lack of a unified bank API and the low quality of transactional data – so we decided to build the infrastructure to fix it.” So Plaid says its API offers clean transaction data such as merchant names, addresses, and geocodes.
The startup is currently in private beta, and Perret said the initial clients have used the API for accounting, automated taxes, and expense management applications (he argued that Plaid could eventually be used in other industries). For example, he said one tax client wanted to build an application that can identify deductible expenses in bank and credit histories.
“In the past, you had to mail your statements and receipts to your accountant, who would read through names like SBXUSQ0112x and try to figure out what the transactions mean,” he said. “Using Plaid, applications allow users to link their accounts and get high-context data on each transaction – cleaning up that transaction to Starbucks Coffee at 41 Union Square West, NYC 10003.”
But are financial institutions going to want to work with Plaid? Well, Perret said the company is currently working with “just a few major banks” today, and that expanding coverage to a big focus for the next year. He claimed that when Plaid works with a financial partner, it doesn’t require much effort from the partner: “The brunt of the work is on us.”
He added, “That said, we’ve found a lot of the big financial institutions to actually be quite forward-thinking in how their users access and utilize their data – and it’s really exciting to be there to help enable that.”
By the way, Perret and the Plaid team (including his co-founder William Hockey) won the grand prize at TechCrunch’s Disrupt NY Hackathon this year for an application that used the Plaid API with the Foursquare API to show credit-card transactions on a map.