Silicon Valley Bank collapsed In March, a slew of startups stepped in to help fill a void in the startup and venture capital world.
One of the startups, HGEspecially if you find yourself in a panic trying to meet a sudden surge in demand.
“The craziest time was the first five days,” recalls CEO and co-founder Immad Akhund. “Things started Wednesday night — there was so much pressure, not only from Mercury’s perspective, the whole of Silicon Valley was holding its breath. People were worried about what was going to happen next.”
Akhonde said much of his first few days were spent on the phone and responding to direct messages from existing customers and potential new ones.
“People are stressed out, saying ‘I need a bank account now’,” he said. “Every issue is so urgent.”
In response, Mercury partnered with partner banks Choice Financial Group and Evolve Bank & Trust to increase its FDIC insurance from $1 million to $3 million and then to $5 million. It also released a new product called Vault, so people can park cash beyond those amounts in U.S. government Treasuries.
According to Akhonde, though, one of the questions that keeps popping up is, “If SVB failed, why is Mercury safe?” In his view, that’s a fair question considering Mercury itself is a startup.
In the first few days after the collapse, the company had more than $2 billion in deposits. Throughout March, Mercury saw nearly 8,700 new customers deposit funds into its accounts.
“It was the biggest month we’ve had at Mercury so far, with huge inflows,” recalls Akhonde. “We tried to prioritize people from the SVB and even built some tools so they could connect to the SVB account.”
But it’s not the short-term boom that Ahund fears.
The company claims that 95% of its net new customers remain with Mercury nearly 90 days after the SVB crisis, and those deposits have held steady. In addition, new client growth continued even after the SVB crisis resolved, with the company doubling its monthly new signups since April, resulting in a total of new clients depositing funds between April and June. 17,000, Akhund shared the figure exclusively with TechCrunch. Today, its total customer base includes over 100,000 businesses such as Deel, On Deck, Linear, Sprig and Forage. This meant that Mercury’s customer base grew from 76,000 to 100,000 within a few months of SVB’s collapse.
He added that the surge in customers has resulted in a 4x year-over-year increase in the company’s annualized revenue run rate from May 2022 to May 2023. Overall, Mercury will process $50 billion in transactions in 2022, Akhund said. In the first half of 2023 alone, the company processed more than $42 billion in transactions. Mercury has also been profitable for the past 12 months, he said.
Additionally, according to data obtained by Kruze Consulting, more than 30% of Kruze customers now have a Mercury account, up from 17% at the end of February and according to Mercury, the highest percentage of any new bank or bank.
While Mercury is open to any U.S. business, its focus is on startups and e-commerce companies, which make up 70 percent of its customer base. Startups, in particular, have unique needs that many claim the big banks cannot adequately meet, Mercury said.
“We’re already growing, and we’re seeing about 20% growth because of what happened with SBV,” Akhund said. “That’s clearly an inflection point, and we’ve picked up speed after that.”
Since its founding in 2017, Mercury has raised more than $163 million in funding from investors including Andreessen Horowitz, Coatue and CRV, as well as angel investors, athletes, entertainers and clients.its last round is $120 million in Series B funding The news was announced in July 2021.
I delved into all these details and more Ahund The Stock Podcast, which you can listen to here.
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