Introduction to Mercury’s Funding Round

Digital banking startup Mercury has successfully raised $300 million in primary and secondary funding, with the company’s post-money valuation now standing at $3.5 billion, as confirmed by Mercury to TechCrunch on Wednesday.

Increased Valuation

This valuation represents more than a doubling of the startup’s valuation since its last capital raise. In 2021, Mercury secured a $120 million Series B round, which valued the company at $1.62 billion post-money.

Details of the Funding Round

Sequoia led the latest Series C round, alongside existing investors Coatue, CRV, Andreessen Horowitz, and new investors Spark Capital and Marathon. Notably, this is the first investment Sequoia has made in Mercury since the startup’s founding in 2017. The raise brings Mercury’s total primary and secondary funding to $500 million. While the company declined to specify the exact breakdown between primary and secondary funding, Mercury CEO and co-founder Immad Akhund indicated that the majority of the Series C round was primary funding.

Future Plans

Mercury is planning a broader employee tender offer at a later date, according to Akhund. Additionally, the startup aims to utilize its new capital for strategic acquisitions and hiring, with plans to expand its workforce from 850 employees to over 1,000 in 2025.

Financial Performance and Customer Growth

Akhund shared that Mercury achieved $500 million in revenue in 2024, marking 10 consecutive quarters of profitability on both EBITDA and GAAP net income. The company boasts over 200,000 customers, with a notable 40% year-over-year customer growth. Its payment volume increased by 64% to $156 billion, with a diverse customer base that includes tech companies, venture capital firms, e-commerce companies, and small businesses.

Product Expansion

Mercury launched its first corporate credit card in 2022 and has been enhancing its bank accounts with software features for bill payments, invoicing, and employee reimbursements. This expansion positions Mercury in more direct competition with fintech rivals Brex and Ramp. Furthermore, the company is set to launch a consumer banking product later this year, announced in April 2024.

Challenges and Future Outlook

Despite past challenges, including drama with partner bank Evolve Bank & Trust and BaaS startup Synapse, Mercury has navigated these issues, including ending its relationship with Evolve and planning to migrate customers to other bank partners. Akhund noted that Mercury stopped sending new customers to Evolve in 2022.

Conclusion

Mercury’s Series C funding round is believed to be the largest fintech funding round announced this year, a significant milestone in a year that also sees Klarna preparing for a potential IPO. With its newfound capital, Mercury is poised for further growth and expansion in the fintech sector.

Reporter’s Note

This article was updated post-publication with additional information and comments from Mercury’s CEO, providing further insight into the company’s plans and financial performance.