Visa invested in their Series C[0], so it seems unusual that they'd also acquire the company (why not acquire it back then?). Any ideas why this might have happened? Past examples?
[0] https://www.crunchbase.com/organization/plaid#section-fundin...
[0] https://www.crunchbase.com/organization/plaid#section-fundin...
Not unusual at all. Pretty typical for CVC in fact. Couple of factors:
1. CVC (Corporate Venture Capital) typically tries to invest in similar markets of companies that either are competitive or pseduo-competitive (think of it as a hedge). For example, this would be like PayPal investing in Venmo.
2. It's cheaper in the long run for a CVC to make 10 of these bets to find that one that doesn't kill their core business model (usually a cash cow). That's why you see Ford/GM putting money into self-driving car start-ups.
3. They were probably not at the level of scale ready for Visa to take them on at the time of the Series C. This was basically a down-payment for their eventual acquisition. It basically "you're too risky for us to buy, so here's some money that we can write off if you end up failing, but if you do fail, we don't have to deal with all of the crap that goes with a failing bus unit (layoffs, compliance, etc).
I'm curious to learn more about strategy here since Paul Graham says there probably aren't more Googles because companies are acquired too soon. Facebook is famous for the Yahoo! offer. Stripe would have been a great acquisition (if they would have accepted any).
1. A de-risking strategy. Investing early effectively discounts a future acquisition, but doesn’t go so far as to bet the farm on the businesses success. They would also gain very early and regular access to financials that would tell them if it’s worth the follow-up plunge or if it is on its way to bust. 2. The founders thought there was more room to grow independently, but wanted to keep Visa friendly and close to home. Best way to do that is to change an acquisition conversation into a partnership/investment conversation.
Or they realized Plaid was becoming too valuable to its competitors. Or they didn't have the cash available at the time. Or Plaid didn't want to sell at the time.
Google Ventures participated in funding a number of companies that Google later acquired.
Had Plaid only been mildly successful, Visa likely would have just continued to let it run and get back its investment. But, now they have a decent amount of transaction data among other things, possibly making it more advantageous to own it outright than hope you can be one of many partners getting access to that data.