Plaid Inc., a startup that provides software for connecting financial applications with one another, has raised $575 million in fresh funding.

The raise was led by a group of new investors that included Franklin Templeton, Fidelity and BlackRock. Plaid detailed in its announcement of the round today that several returning backers chipped in as well. The company’s outside funding now stands at about $1.3 billion.

Plaid is worth $6 billion post-money, less than half the valuation it received following a funding round in 2022. However, the company’s valuation is higher than the $5 billion that Visa Inc. would have paid to buy it in 2020. The acquisition fell through after regulators raised antitrust concerns.

Many financial applications require the ability to interact with users’ bank accounts. An expense tracking tool, for example, must retrieve information about recent purchases to measure spending. Other services require the ability to make payments and manage investments.

Connecting an application to bank accounts is a highly complicated process. Different banks configure their systems in different ways, which requires developers to learn the nuances of each financial institution’s software. There’s also the matter of complying with financial regulations and fending off cyberattacks.

Plaid offers a platform called Link that eases the task. It provides prepackaged integrations with more than 12,000 financial institutions, which removes the need for developers to build everything from scratch. Link can add bank account connections to web, desktop and mobile apps.

The company also offers a second version of the platform called Modular Link. It allows developers to more extensively customize the interface through which users connect their bank accounts to an app. A software team could, for example, redesign the interface pane that displays error messages. 

After connecting to a bank account, financial services can use Plaid’s technology for a range of tasks. The software is capable of retrieving information about the user’s purchases and investments. It’s also possible to make a bank transfer or configure recurring payments for a subscription.

Plaid’s platform is used by thousands of customers, including Zillow Group Inc., Flexport Inc. and other major tech firms The software maker says that those companies use its technology to support hundreds of millions of consumers.

According to TechCrunch, Plaid’s latest funding round follows a year in which its revenue climbed 24%. The company also moved closer toward profitability by returning to positive operating margins. It will use most of the new capital to provide liquidity for employees. 

The funding round is expected to be Plaid’s last before it goes public. However, the company reportedly doesn’t plan to list its shares in the foreseeable future. 

Image: Plaid