How to Invest in Plaid Pre-IPO

By Matthew DiLallo – Updated Feb 5, 2025 at 1:14 PM

Key Points

About 1 in 3 U.S. consumers use Plaid to connect their bank accounts to fintech apps like Venmo.
Visa planned to acquire Plaid for $5.3 billion in 2020 but withdrew due to anticompetitive concerns.
Plaid remains private but has been working toward an eventual IPO.

Plaid provides a vital link between the traditional financial services industry and new financial technology (fintech) apps. When you open a new fintech app account, like Venmo, Acorns, Betterment, or Chime, you'll likely use Plaid's technology to link your bank account to the app. About 1 in 3 consumers with a bank account relied on Plaid to link that account to a new fintech app.

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Fintech

Fintech, short for financial technology, are a variety of software platforms, apps, and hardware solutions that leverage tech to make financial processes easier, more efficient and more profitable.

Visa (V -0.06%) validated Plaid's technology in 2020 when the credit card giant agreed to buy the fintech start-up for more than $5 billion. However, anticompetitive concerns caused Visa to abandon the deal. Undaunted, Plaid has continued growing on its own.

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A person using their phone to send or receive money. — Image source: Getty Images.

Plaid's growing importance in the financial sector has many investors eagerly anticipating its initial public offering (IPO). Here's everything you need to know about the company and alternative options to consider in the fintech sector while you await Plaid's IPO.

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IPO

IPO (Initial Public Offering) is the first sale of stock by a private company to the public, making it a publicly traded entity.

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Monopoly

A monopoly refers to a market scenario where one single person or company controls the entire market for a particular product or service.

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Shareholder Value

The value delivered by a company to investors who own shares in the company.

Step 4: Place an order

Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:

The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
The stock ticker (V for Visa, PYPL for PayPal, or MA for Mastercard).
Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at market price.

Once you complete the order page, click to submit your trade and become a shareholder of one of these Plaid alternatives while you await its IPO. Investors would follow a similar blueprint to buy an IPO stock like Plaid when it goes public. Once shares become available, select Plaid's chosen stock ticker to buy shares through your brokerage account.

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Exchange-Traded Fund (ETF)

An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once.

Here are a couple of notable fintech ETFs to consider:

Ark Fintech Innovation ETF (ARKF +1.14%): Cathie Wood manages this ETF focused on innovative companies in the fintech sector. It typically holds between 35 and 55 stocks and has a 0.75% ETF expense ratio. Notable holdings as of early 2025 were Block (NYSE:SQ), Shopify (NYSE:SHOP), and SoFi Technologies (SOFI +1.73%).
Global X FinTech ETF (FINX +0.87%): This ETF focuses on companies in the emerging financial technology sector. It held shares of more than 60 companies in early 2025, including Block and PayPal, which are in the top 10. The ETF had a 0.68% total expense ratio.

The bottom line on Plaid

Plaid provides a vital link between traditional financial institutions and fintech apps. Plaid's usage (and revenue) will grow as more consumers use fintech apps, which should benefit its investors over the long term. While most people can't invest in its stock yet, the company is open to going public when the time is right. That makes it an interesting pre-IPO stock to watch.

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About the Author

Matt DiLallo has been a contributing Motley Fool stock market analyst specializing in covering dividend-paying companies, particularly in the energy and REIT sectors, since 2012. He also covers pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

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@MatthewDiLallo

Matt DiLallo has positions in Mastercard, PayPal, Shopify, and Visa and has the following options: short February 2025 $77.50 calls on PayPal and short March 2025 $170 calls on Shopify. The Motley Fool has positions in and recommends Goldman Sachs Group, Mastercard, PayPal, Shopify, and Visa. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2025 $85 calls on PayPal. The Motley Fool has a disclosure policy.