Mercury Fund, an early-stage venture capital firm, has successfully secured $160 million in capital commitments for its fifth fund, marking its largest fund to date.
This month has seen a flurry of venture capital firms announcing new capital commitments, with Mercury Fund joining the ranks of Mythos Ventures, Connect Ventures, Fuse, and Unconventional Ventures in unveiling new funds.
Mercury Fund, formerly known as DFJ Mercury, has been in operation for a decade. It adopted the Mercury Fund name in 2013 following a restructuring by Draper Fisher Jurvetson. Over the years, Mercury Fund has played a pivotal role in creating over $9 billion in enterprise value across its portfolio of more than 50 companies.
Initially targeting $150 million, the fifth fund exceeded expectations and garnered support from both existing investors and new limited partners, including university endowments, foundations, and family offices. Many of the new investors are located in the central United States, aligning with Mercury Fund’s focus on this region.
Blair Garrou, co-founder and managing director of Mercury Fund, emphasized that the fund-raising process was relatively swift due to the strong performance of their previous fund. Despite closing just before the COVID-19 pandemic hit, they efficiently deployed capital during this challenging period, backing promising companies such as Cart.com, Otto, and Signal Advisors.
Mercury Fund specializes in investing in founders who are building transformative SaaS and data platforms in smaller technology markets away from the traditional coastal tech hubs. These regions often lack the startup ecosystems and resources found on the coasts. While their earlier focus was primarily on business-to-business industrial SaaS in sectors like automotive, food and beverage, and energy, their current emphasis is on vertical SaaS and consumer-oriented experiences. This shift is exemplified by investments like RepeatMD, a Houston-based patient engagement and fintech platform serving doctors selling non-insurance reimbursed products.
To support portfolio companies in their rapid growth, Mercury Fund has developed an operationally-focused investment model that provides essential resources.
Despite raising for its fifth fund in 2021 while actively deploying capital from its fourth fund, which was the firm’s best-performing fund to date, Mercury Fund continued to thrive. In 2021, the firm’s portfolio witnessed over 10 exits, greatly satisfying its limited partners. The fundraising environment remained robust, with Mercury’s unique model coming into maturity. Even during the economic downturn in 2022, Mercury Fund’s ability to help its portfolio companies achieve capital efficiency made it attractive to institutional investors.
Mercury Fund, often referred to as a ‘middle America’ fund, faces the challenge of raising capital outside traditional tech hubs. However, the pandemic-induced shift to remote work and the ability to tap into talent and capital from anywhere played to the firm’s strengths. Its operational focus and adaptability proved valuable.
To date, Mercury Fund has made seven investments from its fifth fund, with plans to make between 18 and 20 investments overall. These include Polco, a community engagement polling platform for local and state governments, MSPbots, an AI-driven process automation platform for small and mid-sized managed service providers, and Brassica, a financial infrastructure technology company focusing on alternative assets.
Looking ahead, Garrou envisions two to three more years of investing with the current fund, hoping for another fruitful liquidity period in 2025, which could pave the way for another fundraise in the future.
