When Silicon Valley Bank collapsed in March, a wave of startups rushed to help fill a gap in the startup and venture capital community.
One of those start ups, Mercuryin particular was in a position to try and meet a sudden surge in demand amid 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 its breath. People were worried about what would happen next.”
Akhund says he spent most of his time in the first few days making phone calls and answering direct messages from existing and potential new customers.
“People were very stressed and said, ‘I need a bank account now,'” he says. “Every question had this urgency.”
In response, Mercury — in conjunction with partner banks Choice Financial Group and Evolve Bank & Trust — increased its FDIC insurance coverage, 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 money above those amounts in U.S. government Treasury bills.
Still, one of the questions that kept coming up, according to Akhund, was, “If SVB fails, why is Mercury safe?” According to him, the question was justified, given that Mercury itself is a startup.
In the first few days after the collapse, the company saw more than $2 billion in deposits. And throughout March, Mercury saw nearly 8,700 new customers deposit money into its accounts.
“It was by far our biggest month we’ve had on mercury, a huge influx,” Akhund recalled. “We tried to prioritize people coming from SVB and even built some tools for them to connect to SVB accounts.”
But it wasn’t a short-term explosion, something that worried Akhund.
The company claims that 95% of its net new customers have remained with Mercury nearly 90 days after the SVB crisis and those deposits have remained stable. Also, the growth in new customers has continued even after the SVB crisis has passed, with the company doubling new signups per month since April – bringing a total of 17,000 new customers depositing money from April to June, a figure that Akhund shared exclusively with businessroundups.org. Today, its total customer base includes more than 100,000 companies, including Deel, On Deck, Linear, Sprig, and Forage. This means Mercury’s customer base grew from 76,000 to 100,000 in a matter of months in the wake of SVB’s collapse.
That surge in customers has contributed to the company’s annual revenue growing 4x year-over-year from May 2022 to May 2023, he added. Overall, Akhund said Mercury processed $50 billion in transactions by 2022. In the first half of 2023 alone, the company processed more than $42 billion in transactions. Mercury, too, he said, has been profitable over the past 12 months.
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 US company, 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 argue big banks can’t adequately meet.
“We were already growing and we saw about a 20% jump because of what happened with SBV,” Akhund said. “Obviously it’s been kind of a turning point, and we kind of sped up after that.”
Since its inception in 2017, Mercury has raised more than $163 million in funding from investors such as Andreessen Horowitz, Coatue and CRV, as well as angel investors, athletes, entertainers and clients. The last round was a series B of $120 million which was announced in July 2021.
I delved into all these details and much more with Akhond on Equity Podcast, which you can listen to here.
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