Hey friends,

We started researching Mercury earlier this year. To say that the world of banking was in a different place at that point would be something of a euphemism. 

Silicon Valley Bank (SVB) was considered a success story, the 16th largest institution in the U.S., and one commended by Forbes as among the best in the country. Only the ferociously paranoid (or perspicacious) began 2023 believing this was a failure-in-waiting, a bank on the cusp of collapse. Fewer still, I suspect, would have imagined its demise – and broader macroeconomic shifts – would have sparked sector-wide shivers, and the threat of further damage. 

Amidst this mayhem, Mercury is not only executing impressively, but innovating. Since launching in 2017, the banking platform has grown rapidly, reaching a valuation of $1.6 billion. Even more remarkably, it has succeeded in achieving profitability, putting its destiny in its own hands. 

As the tech ecosystem looks for a new financial partner to fill the void left by SVB, Mercury increasingly appears to be a powerful contender. After SVB’s collapse, CEO Immad Akhund announced impressive new protections designed to safeguard customers, including FDIC-insurance up to $5 million through its partner banks and sweep network– 20x the typical coverage. He and his team rolled out that product in less than a week, an example of responding to the startup world’s needs, and stepping up to become a new standard bearer.

To learn about Mercury’s origins, clever partner model, diversified revenue streams, long-term potential, and why The Generalist is a happy customer, jump in.

Jump in

‍This piece was written as part of The Generalist’s partner program. You can read about the ethical guidelines I adhere to in the link above. I always note partnerships transparently, only share my genuine opinion, and commit to working with organizations I consider exceptional. Mercury is one of them.

Brought to you by Mercury

More than 100,000 startups trust Mercury for their banking needs including checking, savings, credit, treasury, and venture debt services. It’s rare for a bank to be loved – but Mercury’s elegant product and extreme usability has made it a favorite among startups, venture capital firms, and e-commerce businesses. 

As well as saving founders and finance teams time, Mercury offers security and protection. Its recent Vault product automatically provides FDIC-insurance up to $5 million – 20x the typical coverage.

The Generalist is one of tens of thousands of companies that rely on Mercury to save time, earn interest, and get peace of mind. To get started, apply here.

Please note: As always, this is not financial advice.

Mercury is Ready for the Moment

Actionable insights

If you only have a few minutes to spare, here's what investors, operators, and founders should know about Mercury.

• A decade in the making. CEO Immad Akhund launched Mercury in 2019, but he had been waiting for a better startup bank to emerge since 2013. He has built a platform designed to solve the pain points he identified as a founder – one that gives time and security to entrepreneurs.  

• Owning the bank account. One investor described the current fintech landscape as a “Game of Thrones.” Mercury is competing against other energetic, innovative businesses, all of which want to be startups’ primary financial platform. One of Mercury’s edges is that its core offering is a bank account, which acts as a client’s business hub. By owning that relationship, Mercury is well-positioned to add ancillary products like treasury services, credit, and venture debt.

• Diversified revenue. Mercury has succeeded in that rarest of startup achievements: profitability. Better still, the banking platform is able to rely on multiple revenue streams, monetizing through deposits, interchange fees, foreign exchange, and beyond. The result is a company capable of growing in divergent macroeconomic environments. 

• Uncharted waters. We are in the midst of what looks like a full-blown banking crisis. Storied institutions are straining under macroeconomic pressures; some are buckling beneath them. Such dynamism could reward a fast-growing startup, but also introduces considerable peril. No one wins if the ecosystem deteriorates. 

• The new standard. Tech lost its historic bank of choice in the past few weeks. The demise of Silicon Valley Bank leaves a massive hole – of systemic importance – that must be filled. Mercury has the opportunity, and perhaps responsibility, to become Silicon Valley’s new standard bearer.

"I'm sure it will be fine. Right?"

On Wednesday, March 8, Mercury CEO Immad Akhund was cautiously optimistic. He had heard rumblings about trouble at Silicon Valley Bank (SVB) for several months, but like the rest of the industry, Akhund believed the forty-year institution was equipped to ride out any turbulence. Even the news that SVB was planning to pull together a last-minute $2 billion round of funding, though concerning, didn't feel cataclysmic. After all, this was an institution valued at nearly $20 billion earlier this year with $175 billion in deposits – partner to power brokers like Andreessen Horowitz, Founders Fund, Kleiner Perkins, Insight Partners, Bain Capital, and more than 2,500 other venture firms. 

In some more sanguine strand of the multiverse, that is where the story might have ended: SVB raised $2 billion, quelling the panic in its tracks. If the 2020s have one ultimate message, however, it is that we live in the most chaotic timeline. This is the age of superbugs and superbubbles, lockdowns and collapses. Welcome to the roaring twenties: a decade of pandemonium. 

The days that followed stayed true to that spirit – at the cost of SVB and the sanity of many in the startup ecosystem. On Thursday, Akhund woke to a wave of new Mercury sign-ups as worried customers fled the flailing incumbent. Friday brought the death knell: the Federal Deposit Insurance Corporation (FDIC) stepped in to take control of SVB, no longer imperiled but incapacitated. On Sunday, the FDIC declared a "systemic risk exception," allowing the government to backstop uninsured deposits. It is not an exaggeration to say that without such decisive action, the tech sector might have undergone a nuclear winter, an epoch of death in which only the indestructible survived. For now, at least, the worst has been avoided. 

For Mercury, this five-day spell in March may prove the most consequential of its history. Though it has had plenty of eventful moments on its path to becoming a profitable banking platform valued at $1.6 billion, no episode tells us more about Mercury's DNA and preparedness for the post-crash age. As its largest rival imploded, Akhund did not gloat; he built. Over that hectic weekend during which SVB sought an acquirer and founders fretted over making payroll, Mercury's team set to work constructing a new product designed to make customer deposits safer than ever. They did so even while onboarding a record number of customers, with Akhund working around the clock to handle support requests and personally responding to customer queries. 

That Monday, Mercury announced Vault, a risk management product providing $3 million in FDIC insurance – 12x the typical coverage. By that Friday, Mercury announced its protection had been increased to $5 million. Mercury can only offer these unusually high safeguards because of its core model: it is not a bank but a layer on a network of partner institutions. At this level, at least, there is no single point of failure; risk is distributed, and each node in the network can provide insurance.

Another major launch swiftly followed. Recognizing that many venture firms had found themselves unhoused by SVB's demolition, Mercury launched a dedicated venture offering on March 22, providing the same protections, support for VC-friendly jurisdictions like the British Virgin Islands, and bespoke customer support. 

Mercury's response to tech's banking crisis suggests it is prepared for the opportunity and responsibility that stands before it. Silicon Valley needs a new bank. A multi-billion dollar hole has opened that must be filled. Mercury's customer obsession, networked model, innovative product suite, and grace under fire means it appears ready for the moment.

Origins: Building a better bank

Immad Akhund finally had a chance to breathe. 

After eight years of building, he'd finally sold his startup Heyzap. It represented the end of a long, convoluted journey that didn't always seem set for a successful outcome. 

In 2008, he founded the business with fellow University of Cambridge graduate Jude Gomila. They'd gotten off to a strong start, gaining acceptance to Y Combinator and eventually raising $8 million from iconic firms like Union Square Ventures and legendary investors like Naval Ravikant and Chris Dixon. 

Startup success is rarely so simple, though. While Akhund and Gomila had initially set out to build a flash gaming portal, finding product-market fit proved challenging. "We had four full pivots," Akhund recalled, with Heyzap eventually morphing into a toolkit that helped gamers optimize in-app advertising revenue. That was the business that attracted the attention of RNTS Media and secured a $45 million acquisition. For Akhund and Gomila, it was not only a vindication of their "relentless resourcefulness," as Y Combinator founder Paul Graham might have described it, but also a relief – the end of a saga that may have ended in triumph but involved plenty of frustration. 

Despite the intensity of building Heyzap, Akhund didn't sit still for long. As early as 2013, another business idea began to play on his mind. In running his last company, Akhund encountered constant friction, particularly when moving and managing money. Even in Silicon Valley, the home of innovation, sending or receiving wires was an ordeal, the kind of pain that belonged in the age of fax machines and dial-up internet – not the software capital of the world. Even compared to London, where he'd grown up after emigrating from Pakistan, the state of affairs had seemed better evolved. "The banks we used in London were better," he said. "Money moved quicker; the mobile experience was more advanced."

While building a company had given Akhund broad exposure to the subpar banking experience startups faced, the eccentricities of Heyzap's model hammered it home; Akhund's firm handled payouts for game publishers, making money movement an essential operation. "We had to send money to 600 publishers at the end of each month," Akhund recalled. "It used to take us three days to get it all right." 

When he'd tried to streamline the process with technology, he'd met a series of dead-ends. "I'd call up these banks and ask if they had an API we could use. They'd say, 'Sorry, we don't know what you're talking about.'"

The pain banking caused Heyzap convinced Akhund of the opportunity in the space, a belief that solidified into a more tangible business idea in 2013. Though institutions like Silicon Valley Bank might have made their name serving the sector, they'd hardly adapted to the software revolution and didn't seem sufficiently driven to overhaul their technical capabilities radically. Updating a few features here and there might help, but Akhund doubted it would be sufficient to address entrepreneurs' challenges. A comprehensive alternative was required: a banking platform designed for startups powered by software. 

Someone needed to build it, Akhund thought. But it wasn't going to be him. "I was busy with my own company. I wasn't going to quit Heyzap to do it."

"I was sold pretty quickly"

Two years later, a company attempted to build Akhund's concept. In 2015, Seed followed in Heyzap's footsteps, raising from Y Combinator. Akhund viewed their entry into the market with both relief and regret. He was glad that someone was finally trying to solve this problem, but part of him wished he had been the one to do so. "I remember thinking it was a shame I couldn't build it."

As it turned out, Seed's founders might have shared Akhund's enthusiasm for the problem space, but they diverged when it came to constructing a solution. "They executed it very differently than I'd visualized it," Akhund said. That meant that by the time Heyzap's founder was ready for his next challenge; his vision had yet to be tackled. 

In January 2017, Akhund began building his next startup: Mercury. He recruited two Heyzap executives to join him, former VP of Business Development Jason Zhang and software developer Max Tagher. As Tagher remembers it, he didn't need much persuading. "I think I was sold pretty quickly," he said. "It was simple: something bad exists in the world, and we can make it better."

Mercury's founders weren't necessarily the natural choice to tackle the opportunity. After all, none of them had built a business in fintech before, despite Heyzap's convoluted payment operations. "I wasn't a fintech entrepreneur at that point," Akhund said. "And the idea of building this business as a product or software entrepreneur wasn't obvious."

Beyond the clear need for a better startup bank, Akhund was compelled by the scale of the opportunity in the space. "A lot of startups are really features," he said. "I was looking to build something for the next ten or twenty years. If you could figure this problem out, it could be a lot bigger than a feature. It could be a platform."

Recognizing how much he had to learn about fintech and feeling somewhat daunted by the prospect, Akhund set about learning. Over the next few months, he spoke to as many fintech lawyers, entrepreneurs, and investors as possible, including executives at Monzo, Aspiration, Simple, and N26. Akhund estimated he conducted more than 90 interviews to get a sense of the landscape, validate his feature set, and affirm his conviction. "When you first approach something like this, it seems overwhelming," he said. "But by the end of these ninety conversations, I knew the problem wasn't trivial – but I had a path to follow."

In August 2017, Mercury raised $6 million from Andreessen Horowitz (a16z) to chase its vision. For Alex Rampell, backing Akhund was an easy bet to make. "It was a really good idea," the a16z General Partner remarked. "There are some very strange niches – like startup banking – that are really quite big. And once you start holding funds for these companies, there are so many amazing things you can do."

Keep reading

There’s a lot more to the story, and I hope you enjoy the rest of the piece!

Until next time,

Mario