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The DOJ's decision to block Plaid's $5.3 billion deal with Visa was a shocking 'shift' by regulators, VCs say. But 2021 will still be a good year.

The DOJ's decision to block Plaid's $5.3 billion deal with Visa was a shocking 'shift' by regulators, VCs say. But 2021 will still be a good year.

Zach Perret, CEO and cofounder of Plaid.
Plaid




The $5.3 billion acquisition of fintech startup Plaid by Visa was officially called off last week after the Department of Justice (DOJ) sued in November to stop the deal.




Fintech investors aren't happy with the move, calling it a "paradigm shift" in how regulators behave that could make it difficult for startups to be acquired.




Still, they believe the failed deal is actually good for Plaid, and say the booming public markets will make 2021 a stellar year for fintech startups, and their investors, looking for an exit.




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For Plaid's investors, the company's scuttled $5.3 billion acquisition by Visa was a blessing in disguise. They predict the financial software company will have a much bigger exit now that it has emerged as one of the winners from the pandemic."I think it's a great thing that they're staying private. Everyone knows and believes that their valuation is probably already 2x what Visa was going to pay anyway," said Menlo Ventures partner Matt Murphy, who has no stake.For comparison, Plaid had an estimated valuation of around $2.65 billion before the Visa deal, according to deals database PitchBook.But the outcome has other implications that should worry fintech startups, insiders say.
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