Mercury Fund, an early-stage venture firm, closed on $160 million in capital commitments for its fifth fund, also its largest.
In general, it has been a busy month for venture capital firms, with new capital commitments being announced. Mercury Fund joins companies like Mythos Ventures, Connect Ventures, Fuse and Unconventional Ventures in announcing new funds this month.
DFJ Mercury, which has been around for a decade, was previously known as the company. In 2013 it took on Mercury Fund moniker when Draper Fisher Jurvetson restructured its companies. Mercury Fund has helped create more than $9 billion of enterprise value across its portfolio of more than 50 companies.
This fifth fund had an initial target of $150 million and is supported by existing investors and new limited partners, such as university endowments, foundations and family offices. Some of the new investors are based in the Central United States where Mercury invests, Blair Garrou, co-founder and managing director of Mercury, told TechCrunch.
Mercury Fund in Houston usually raises every three to four years to give time to deploy the capital, Garrou said.
The firm invests in founders' creation of transformative SaaS and data platforms in smaller tech markets outside of the coastal tech hubs. In regions that lack the kinds of startup ecosystems or resources as they do on the coast, they are not able to find the kind of infrastructure they need.
In speaking about where opportunities are for SaaS in those regions, Garrou said, there was more focus on business-to-business as it relates to industrial SaaS. The automotive, food and beverage and energy industries are examples of industries that include automotive, food and beverage and energy.
Today, vertical SaaS and entrepreneurs are taking over the consumer experience. Garrou, for example, saw that it had one of its investments from the new fund in Otto and also in RepeatMD. RepeatMD is a provider of patient engagement and fintech platform in Houston that offers non-insurance reimbursed products.
Mercury has created an operationally-focused investment model that enables portfolio companies to grow more quickly by providing these resources.
Mercury Fund was raising for its fifth fund in 2021, while deploying capital from its fourth fund, which Garrou said was our best performing fund to date. The firm's portfolio had more than 10 exits that year, which appears to make the limited partners very happy.
Garrou described the funding environment as 'pretty robust', noting that the firm's model came into maturity during that time. When funding fell in the year 2022, Garrou went back to Mercury LPs to reopen discussions, and not only did the LPs stick with them, but some doubled their initial investment.
When the recession 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 percent of its investments. Other notable community engagement polling platforms 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 firm, developing enterprise solutions for alternative assets based in Houston and Cheyenne, Wyoming.
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