Visa is set to acquire Plaid, a developer of APIs that allow consumers to share their financial data with thousands of apps, for $5.3 billion. 

Plaid is the data layer that connects >11,000 banks and financial services companies, >2,500 FinTech firms, and >200 million consumer and business accounts globally. The Company’s last private financing round was a $250 million Series C at a $2.65 billion post-money valuation in late 2018. 

According to Visa, as of today 75% of internet-enabled customers around the globe have used a FinTech product or service to manage and move money vs just 18% in 2015. In short, Plaid has grown to enormous scale by offering the pipes and infrastructure to support many of these new apps. 

Visa says that Plaid provides a perfect platform for extending Visa's integrated payment solutions and existing value-added services, while also giving Visa a front row seat to watch and learn how fast-growing FinTech firms and developers are using data to create new products. 

What does this monster acquisition mean for founders and investors in InsurTech?  

i) It provides further validation that incumbents are waking up and buying into the FinTech revolution. Founders and investors should expect to see more strategic acquisitions across FinTech and InsurTech in the years to come. 

ii) InsurTechs themselves are likely to become growing users of Plaid's services, especially as embedded insurance products become more integral parts of digital banking platforms and personal finance apps / marketplaces that are already using Plaid. 

iii) Many start-ups are competing for consumer dollars, but there is an enormous opportunity in building better pipes for the industry. This raises the question, what does it mean to be the "Plaid for insurance" and who is building it? 

On one hand, we are seeing the API-ification of the insurance business everywhere we look. From InsurTechs like Bold Penguin seeking to connect brokers and carriers, to Matic and Insurify's digital-first shopping experiences, to transaction layers for processing data in life and health insurance like Human API and Noyo.  

Meanwhile, carriers and brokers have been slow to adopt API-first architecture. Many carriers do not want to disrupt their traditional distribution channels and their slowness is strategic. Others have in-house development teams that simply can't keep up. When you combine the inertia of incumbents with the reality that consumers and businesses transact insurance data much less frequently than bank account data, you begin to realize that there may not actually be a "Plaid for insurance" that looks (and makes $) like the one that exists in the banking world.  

Nonetheless, we have conviction at MTech Capital that increasing connectivity and data sharing among all stakeholders in the value chain is the future of insurance. We will continue to make investments that reflect this thesis.