Mercury Fund, an early-stage venture firm, has successfully raised $160 million in capital commitments for its fifth fund, also its largest.
It's been a busy month for venture capital firms announcing new capital commitments. Mercury Funds, a venture capital firm, joins firms such as Mythos Ventures, Connect Ventures, Fuse and Unconventional Ventures to announce new funds this month.
The firm has been around for a decade now and was previously known as DFJ Mercury. Draper Fisher Jurvetson restructured its firms and named it the Mercury Fund moniker in 2013 after it took on the Mercury Fund moniker. Mercury Fund has accumulated more than $9 billion in enterprise value in its portfolio of over 50 companies.
The fund has an initial goal of $150 million, and is backed by existing investors and new limited partners, such as university endowments, foundations and family offices. Many of the new investors are based in the central United States where Mercury invests, a co-founder and managing director of Mercury, Blair Garrou, said at TechCrunch.
Mercury Fund, a Houston startup, typically raises its capital every three to four years to give time to deploy the capital, Garrou said.
The firm invests in founders' creation of transformational SaaS and data platforms in smaller tech markets outside of the coastal tech hubs. In regions where they don't have the kinds of startup ecosystems or resources as on the coast, it's a disadvantage.
Over five years ago, Garrou said, there was more focus on business-to-business as it relates to industrial SaaS. For example, the automotive, food and beverage and energy industries.
Today, vertical SaaS and entrepreneurs are taking over the consumer experience. In Otto and also in RepeatMD, Garrou saw one of its investments from the new fund. RepeatMD, a Texas-based patient engagement and fintech platform, allows doctors to sell non-insurance-received products.
Mercury has created an operationally-focused investment model that enables portfolio firms to rapidly expand their portfolios.
Mercury Fund was raising for its fifth fund in 2021, deploying capital from its fourth fund, which Garrou said was our best performing fund to date. In the year that followed, the firm's portfolio had more than 10 exits, which seems to make the limited partners very happy.
Garrou said the funding environment was pretty robust, noting that the firm's model came into maturity during that time. When funding fell in 2022, Garrou went back to Mercury's LPs to reopen discussions and not only did the LPs stick with them, but some doubled down on their initial investment.
Even though the recession period started, Mercury, already working with its companies to be capital efficient, was really attractive to institutional investors, Garrou said.
Mercury has also made seven investments from the fifth fund so far. Garrou expects to make between 18 and 20 investments in total. Some of them include Polco, a community engagement polling platform for local and state governments based in Wisconsin, MSPbots, a Chicago-based AI-driven process automation platform for small and mid-sized managed service providers, and Brassica, a financial infrastructure tech company that creates enterprise solutions for alternative assets based in Houston and Cheyenne, Wyoming.
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