How Mercury is Reinventing Banking* For Entrepreneurs

Challenges in funding startups

Entrepreneurs also face hurdles when attempting to secure funding for their startups—and not just from incumbent banks

High tech scares most bankers

When a startup is breaking new ground in a high tech space, many incumbent banks are reluctant to extend loans because they don’t understand the business or industry. “Lots of Web3 companies are denied financing by traditional banks because banks just don’t want to serve those kinds of customers,” says Heather.

Further, incumbent banks are generally reluctant to tailor their lending products to the specific needs of emerging companies. “Banks tend to shove businesses into their existing lending products instead of working to understand what that business needs and partner with them to grow,” says Parker.

Too small to attract investors

Many early-stage startups are too small to attract interest from investors, which is why many entrepreneurs have to self-finance or seek loans from family and friends to get their companies off the ground. It’s the only way to get the first few thousands of dollars they need to turn their great idea into something tangible.

However, self-financing and family loans aren’t an ideal solution—and they aren’t an option at all for many entrepreneurs.

Lack of investor connections

Another issue that many entrepreneurs face when trying to fund their startups is a lack of network connections. And without the right connections, finding a VC or angel investor is challenging and time-consuming. “Connecting with investors and raising money is a tricky thing, especially if you’re not part of the Silicon Valley network or alumni of a tier-one university,” says Immad.

Accelerators are designed to address just this kind of problem. But accelerator programs themselves are typically only found in large financial centers, which puts those outside of big cities at a disadvantage. Competition is also tough—and even if a startup is accepted into an accelerator program, they may have to give up some equity in return.​

Biases in funding decisions

All of these challenges point to a broader problem of inequitable access to funding. It’s an injustice that the team at Mercury is well aware of—and determined to correct. “Raising money isn’t a transparent process,” says Parker. “Unfortunately, it’s very much based on your network and who you know.”

Steep learning curve for Series A

Startups face even more challenges once they successfully raise seed money and put their sights on a Series A raise. They need to get clarity in how they’ll scale, use the funds raised, and acquire the talent to grow. Otherwise, they’ll scare off Venture Capital firms.

Getting in front of new customers

Direct-to-consumer startups face the added challenge of getting in front of new customers. Not every seed-stage startup can introduce its product or service to a broader audience through celebrity spokespersons or high profile connections, yet they need new customers to keep the bottomline healthy as they scale.

An opportunity to reinvent the banking experience

Immad had thought about reinventing the banking experience for entrepreneurs for years. He also had a deeply felt desire to help entrepreneurs overcome their funding challenges.

Immad finally had the time to explore these ideas more fully when he finished his tenure at Heyzap in early 2017. (Immad sold Heyzap to RNTS Media in 2014 for $45 million.)

Immad attended about 90 meetings with lawyers, bankers, fintech experts, entrepreneurs, and others over five months to explore how he could deliver a new banking experience to entrepreneurs and startups. “I talked to a lot of people to figure out if this was even possible,” says Immad. “This was back in 2017, and it wasn’t obvious how to go about setting up a new kind of banking product.”​

Even though Immad had promised his wife he’d take a year off after leaving Heyzap, Immad decided to forge ahead with a new approach to banking with Mercury.

Mercury: an all-in-one banking platform for startups

Immad incorporated Mercury in August 2017. While Mercury may sound like a bank, it technically isn’t. It describes itself as a financial technology company. Banking services are provided by its partners, Choice Financial Group and Evolve Bank & Trust®. Savings and checking accounts are insured up to the FDIC limit through these partners.​

Mercury helps startups grow through a product suite that includes:​

• Checking and savings accounts

• Treasury accounts

• Physical and virtual cards

• Wires, ACH, and checks

• Capital and venture debt

Mercury has transparent pricing, with no minimum balances, free bank accounts, free USD and domestic wires.

Mercury makes its money by receiving a percentage of the fee charged to merchants when customers use their Mercury debit cards. It also earns a small percentage of the interest paid on deposits.​

Banking for entrepreneurs

Immad designed this new approach to banking with the needs of entrepreneurs in mind, starting with the composition of his team. Five of Immad’s eight initial team members had worked with him at Heyzap—so all had lived the startup journey.

Mercury continues to grow its team by prioritizing this shared understanding of the entrepreneurial experience. “A lot of the Mercury team consists of past founders—people who’ve started their own companies or consulted with startups,” says Parker. “So we come at things from the founder angle, whether that’s the core banking experience or financing.”

With this team in place, the focus remains firmly on the entrepreneurial experience. “Mercury is all about helping entrepreneurs,” says Immad. “That’s why I started it. I’ve been an entrepreneur for a long time and all my friends are entrepreneurs. It’s a hard journey, so if we can make it a little easier, that’s a good thing.”

Parker agrees: “We want to partner with each individual founder and company to understand where they’re at in their life cycle, what type of business they have, and what type of financing they need to help them grow, whether that’s equity or debt.”

Design that’s built for humans

Immad and his team also invested in design to improve user experience. Juliana Vislova, VP of Design at Mercury, explains: “Founders are busy building their companies and don’t have time to waste on banking bureaucracy or complex processes. We wanted to make the banking experience simple, clear and beautiful.”

Today, Mercury receives constant positive feedback from its customers about the usability of its interface. “The greatest compliment our design team can receive is when a customer tweets or emails us to say how much they enjoy using Mercury,” says Juliana.

Parker agrees: “Our user experience is something our customers love.”

Programs to help entrepreneurs with funding

Alongside a reinvented banking experience, Immad and his team also wanted to help entrepreneurs overcome some of the challenges they face when trying to raise funds. Immad and his team launched Mercury Raise in the fall of 2020.

Mercury Raise consists of four programs, each with a different focus:

• Mercury Raise First Check
• Mercury Raise Seed
• Mercury Raise Series A
• Mercury Raise DTC

Mercury Raise First Check

Mercury Raise First Check helps entrepreneurs secure an initial investment and obtain exposure to get their great idea off the ground. The top 20 finalists are featured on the Mercury blog and social media channels. They’re also invited to connect with one another and any investors who express an interest. The Mercury community of customers, investors, and supporters vote for their favorite finalists.

The three companies that receive the most votes are offered a $15K investment on an uncapped MFN SAFE to be deposited in their Mercury accounts.

The goal of Mercury Raise First Check is to help promising startups at the earliest stages. “We know that a first check is an important milestone and can turn an idea into reality—we also know how difficult it can be to raise. Mercury Raise First Check hopes to bridge that gap,” says Immad.

Mercury Raise Seed

Mercury Raise Seed gives entrepreneurs a way to get their startups in front of potential investors to raise pre-seed and seed rounds. Entrepreneurs apply to have their company information shared with 500-plus investors, and a Mercury evaluation committee chooses the top 50.

Finalists can also opt to receive one-to-one pitch feedback from a top investor or founder.

If an investor expresses an interest in learning more about a startup, Mercury makes a personal introduction. Startups can also select the investors they’d most like to meet.

Raise Seed is successfully serving many different demographics, from third-time founders with deep Silicon Valley connections to first-time founders in emerging markets. One example is Graviti, a Mexico City-based company that gives the unbanked population in LATAM access to home appliances. Graviti joined Mercury Raise Seed in 2021 and, through a series of introductions, found investors to fill out $2.3 million of its $2.5 million round.

Mercury Raise Series A

Mercury Raise Series A is a way to help entrepreneurs master the steep learning curve that comes with the Series A stage of funding.

About 30 applicants are selected and invited to attend an all-day, in-person bootcamp in San Francisco. They receive 1:1 feedback sessions with established mentors as well as fireside chats with notable investors and founders. Topics such as pitching, building a pipeline, managing investor dynamics, budgeting, and setting company milestones are covered.

Mercury Raise DTC

Mercury Raise DTC gives entrepreneurs the opportunity to pitch directly to investors and potential customers in front of an audience of supporters. Six companies are selected.​

If investors like what they hear, they can offer to fund a startup on the spot. It’s also a great opportunity to expose a startup to hundreds of potential customers. “It’s a Shark Tank style event where we have investor judges, such as Kevin Hartz, co-founder of general partner at A* Capital and co-founder of Eventbrite,” says Heather. “The companies get to pitch their product and company live, and investment happens through that.”

Mercury doesn’t make money from any of the Mercury Raise programs. Instead, its goal is to provide founders with the education, access to investors, and distribution channels that will give them more leverage in the fundraising process—and help overcome inequities.

Mercury Raise has only been around for a couple years, but it’s already a huge success. “We launched it in the fall of 2020. We've since worked with 635 startups from 32 countries and helped accelerate $1.7 billion in funding,” says Heather. “We're onto something powerful—where people are getting the connections, resources, and help they need to build their businesses.”

Last round, Raise Seed alone received 1,450 applications and selected 55 of them to share with 500 investors. “It led to a lot of direct connections and a lot of investments,” says Immad.

Useful perks and discounts

In their quest to better serve entrepreneurs, Immad and his team continually dream up new products, services and programs. One idea they quickly adopted was facilitating deals and discounts on the tools startups and founders need the most—an idea that became the Mercury Perks Program.

The Mercury Perks Program is how Mercury first connected with HubSpot. HubSpot offers Mercury customers preferred pricing on the HubSpot CRM Platform through HubSpot for Startups. “HubSpot is obviously a great marketing platform that lots of startups and entrepreneurs use, so we’re super excited to have them in our Perks Program,” says Immad. “Entrepreneurs get a lot of value out of it.”

Heather further explains the synchronicity between the two companies: “New customers have been incorporated less than six months on average. So the HubSpot for Startups program is a natural fit with these early-stage companies.”

“HubSpot is obviously a great marketing platform that lots of startups and etrepreneurs use, so we’re super excited to have them in our Perks Program. Entrepreneurs get a lot of value out of it.”

—Immad Akhund, CEO and Founder

Unicorn valuation

By the end of 2021, Mercury had raised $120 million Series B at a $1.6 billion valuation. “Today, we have about 70,000 customers using Mercury, such as Sprig, Maven, CoinTracker, and Lendtable,” says Immad. “We start from the smallest companies with less than a few thousand dollars in their Mercury bank accounts all the way up to companies with more than a hundred million with us.”

The entire Mercury team is excited about what the future holds: “Tomorrow’s next great company is a small company today,” says Heather. “We want to find those diamonds in the rough and help them grow and succeed.”​

Immad has no regrets about not taking a year off when he had the chance. “It’s a privilege to be an entrepreneur. You get to wake up every day and do something you’re inspired to do. But at the same time, it’s hard work with a lot of struggles. So we want to do what we can to make it easier.”