When Silicon Valley Bank collapsed in March, a flurry of startups rushed to step in to help fill a gap in the startup and venture capital community.
One of those startups, Mercury, in particular found itself in the position of trying to meet a sudden surge of demand amidst the panic.
“The craziest time was the first five days,” recalls CEO and co-founder Immad Akhund. “It started Wednesday night — where it was very stressful and not just from Mercury’s perspective, but all of Silicon Valley was holding their breath. People were worried about what was going to happen next.”
Akhund says he spent most of his time those first few days on calls and responding to direct messages from existing and potentially new customers.
“People were very stressed and saying ‘I need a bank account now,’” he says. “Every question had this urgency.”
In response, Mercury — working with partner banks Choice Financial Group and Evolve Bank & Trust and their sweep networks– upped its FDIC insurance, first from $1 million to $3 million and then to $5 million. It also released a new product called Vault, so people could park their cash beyond those amounts into a money market fund composed primarily of government-backed T-bills.
Still, one of the questions that kept coming up, according to Akhund, was, “If SVB is failing, why is Mercury safe?” The question was fair, in his view, considering that Mercury itself is a startup.
In the first few days after the collapse, the company saw more than $2 billion in deposits. And in all of March, Mercury saw nearly 8,700 new customers depositing funds into its accounts.
“It was by far our biggest month we’ve had at Mercury, a huge inflow,” Akhund recalls. “We tried to prioritize people coming from SVB and even built some tools so they could connect to SVB accounts.”
But it wasn’t a short-term boom, something that Akhund was worried about.
The company claims that 95% of its net new customers have stayed with Mercury nearly 90 days out from the SVB crisis and that those deposits have held steady. Also, that new customer growth has continued even after the SVB crisis has settled, with the company having doubled new signups per month since April — leading to 17,000 total new customers depositing funds from April to June, a figure that Akhund shared with TechCrunch exclusively. Its total customer base includes businesses such as including Deel, On Deck, Linear, Sprig and Forage. The company says it crossed the 100,000 customer mark in 2022.
That recent surge of customers has contributed to the company’s annualized revenue run rate growing 4x year-over-year from May 2022 to May 2023, Akhund told TechCrunch. Overall, in 2022, Mercury processed $50 billion in transactions. In the first half of 2023 alone, the company has processed more than $42 billion in transactions. Mercury also, he said, has been profitable for the last 12 months. He declined to say how many customers the company specifically has today, saying only that it is “over 100,000.”
Further, according to data obtained from Kruze Consulting, more than 30% of Kruze’s clients now have a Mercury account, up from 17% at the end of February — the highest share of any neobank or bank, according to Mercury.
While Mercury is open to any U.S. business, its focus is on startups and e-commerce companies, which make up 70% of its customer base. Startups in particular, Mercury touts, have unique needs that many claim big banks are unable to adequately meet.
“We were already growing and we saw an approximately 20% jump because of what happened with SVB,” Akhund said. “It’s obviously kind of been an inflection point, and we’ve kind of sped up after this.”
Since its 2017 inception, Mercury has raised over $163 million in funding from investors such as Andreessen Horowitz, Coatue and CRV as well as angel investors, athletes, entertainers and customers. Its last round was a $120 million Series B that was announced in July of 2021.
I dug into all these details and much more with Akhund on Equity Podcast, which you can listen to here.
Reporter’s note: The story was updated post-publication to correct the number of customers that Mercury has.
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