Venture capitalists react to Visa-Plaid deal meltdown

'There is so much left for them to build in fintech infrastructure'

Congratulations, you’re no longer selling your company for billions of dollars!

As strange as it sounds, that’s the leading perspective from venture capitalists concerning Plaid, now that its much-touted sale to Visa has fallen apart.

The $5.3 billion deal would have seen banking API startup Plaid join consumer payments and credit giant Visa. But the American government took a dim view of the deal, and according to Axios reporting, Plaid felt like it could be worth more money in time.

The TechCrunch team has collected views from venture capitalists, analysts and Anshu Sharma, CEO of another API-powered startup and a former VC to get a better view on the perspectives in the market concerning the blockbuster breakup.

From the venture capital side of things, most takes we received were bullish regarding Plaid’s chances now that it’s no longer being taken over by Visa. Amy Cheetham, for example, of Costanoa Ventures, said that the result is “good for the company, ultimately.” She added that Plaid may now see better “talent acquisition,” faster product decisions and a better eventual valuation.

“There is so much left for them to build in fintech infrastructure,” Cheetham said in an email, adding that she sees “Stripe-like scale potential” in Plaid. Stripe is reportedly raising capital at a valuation that could reach $100 billion.

Cheetham is not alone in her bullish perspective. Nico Berandi of Animo Ventures wrote to TechCrunch to say that he “still wishes” that his firm had been “around back then to have invested” in Plaid, adding a smiley face at the end of his missive.

Sheel Mohnot, co-founder at Better Tomorrow Ventures, a seed-stage fintech firm, was surprised that the government was discouraging the deal, but like others thinks it could be a better outcome for the company. “I think the feds were very misguided here. Visa is not monopolistic in online debit transactions and adding Plaid does not significantly change that. It would have been a great combo. but I think Plaid is worth a lot more than $5.3 billion now, so this is actually great for everyone involved,” Mohnot told us.

On Twitter there were even more perspectives to parse. Lucas Timberlake of Fintech Ventures said he thought that Square or Stripe would have been better Plaid acquirers than Visa. If Plaid agrees, and the Department of Justice doesn’t mind, perhaps there are still M&A pathways for the startup.

Allen Miller of Oak HC/FT tweeted at TechCrunch that he’s excited for Plaid, that the breakup is an “opportunity for them to dream bigger and go further as an independent company,” adding that the situation is a “good thing” for the world of financial technology startups.

Sri Muppidi of Sierra Ventures is generally bullish on the future for Plaid, which is “likely to double down on building and go public eventually,” she said. But she appeared concerned about the impact of the breakup on the fintech M&A market, tweeting that not many companies go public, and that she’s “curious about how increased antitrust scrutiny on M&A will affect venture activity in the long run.”

Christian Lassonde of fintech-focused Impression Ventures seemed to share her concerns, tweeting that the termination of the deal was “Ice. Cold. Water.” Down, we presume, the neck of fintech startups who had used the Visa-Plaid deal to argue for higher valuations, only to see a key exit window possibly close.

Holger Mueller, an analyst with Constellation Research says that this was a case of Visa execs not wanting to pick a fight to make this deal happen. “Not surprisingly Visa executives did not have the appetite to take the government to court. Proving you don’t have a dominant position can be hard and the Visa/Plaid combination could have reduced competition,” he said, adding,”This sends a signal to the top three players in a market to not try to pick up another top three player in an adjacent or complementary market.”

And, finally, Anshu Sharma. The Skyflow CEO said that the fact that Mastercard and Visa invested in Plaid, and the latter tried to buy it helps show that API-delivered products are not a flash in the pan, but are instead part of a “once-in-a-lifetime, generational shift” in how software works. He was bullish on Plaid outside of Visa’s grip.

Turning from his current founder perspective to his investor guise, Sharma said that Plaid is worth more today than it was, and that today’s investors are more in a greed mode than a fear mode. So, perhaps any potential chill amongst investors, concerned that fintech startups now have a much narrower path to an exit won’t be quite as icy as we first thought.

TechCrunch is speaking with the CEO of Plaid later today and will have more. But it will be interesting to see how much quicker Plaid can move, if at all, now that it is freed of a future that it no longer controlled. And what it might be worth in a year or two.