Most fintechs spent the last few years getting their valuations cut, but Mercury just raised at 49% higher than its last round and is trying to become an actual bank.
The Round
Mercury, the San Francisco fintech that provides banking-style services to startups, raised $200 million in Series D funding at a $5.2 billion valuation. The round was led by TCV, the firm behind Revolut and Nubank, with existing investors Sequoia Capital, Andreessen Horowitz, and Coatue also in.
It's the kind of round that almost stopped happening in fintech after the 2022 reset, which makes Mercury's numbers stand out. The company has more than 300,000 customers, including roughly a third of early-stage U.S. startups.
CEO Immad Akhund told CNBC that Mercury hit $650 million in annualized revenue and has been profitable for four straight years.
A lot of that growth ties back to AI, since Akhund said founders building new AI startups, and non-AI companies using AI to ship faster, have driven a wave of new account openings.
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Becoming An Actual Bank
Mercury recently got conditional approval from the Office of the Comptroller of the Currency (OCC) to become a federally regulated bank. Akhund expects final approval to be ready around 2027 as the company builds out its products and compliance controls.
Right now, Mercury runs on top of partner banks Column and Choice Financial, a model where the fintech holds the customer but a chartered bank holds the deposits. Once Mercury has its own charter, it can keep more of the revenue, expand its loan products, join the Zelle instant-payment network, and lean less on those partners.
That shift matters beyond Mercury, since the collapse of fintech middleman Synapse exposed real cracks in the partner-bank model, and big fintechs have been racing to vertically integrate ever since. Even so, Akhund said Mercury still plans to work with partner banks for some services.
What To Watch
The 49% valuation step-up in 14 months bucks the fintech trend, with investors clearly wanting exposure to the survivors of the fintech downcycle (Mercury, Ramp, and Stripe in particular) and willing to pay up.
Akhund also said he wants Mercury to go public, instead of getting sold to a bank the way Brex did in January. If the OCC charter clears in 2027, Mercury will be a profitable, founder-led, AI-enabled bank with a startup customer base, which is a rare combo on the public market.
A real bank charter changes both the business model and the exit.
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