Mercury Fund leads seed funding round for Brassica, fintech co. founded by NextSeed CEO

A Houston fintech startup raised seed money thanks to a longtime relationship between its founder and the investor leading the funding round.

Brassica Technologies, which produces transfer services between traditional banks and those relying on newer innovations such as Web3 — a new stage of the internet driven by blockchain — raised $8 million from a round led by Houston-based Mercury Fund. Other investors in the round include Valor Equity Partners, Long Journey Ventures and South Korea-based Alpha Asset Management. The seed round takes Brassica’s total funding to over $12 million.

Brassica said the funding will be used to hire a services operation team in Wyoming and to scale the company’s product, engineering, business development and customer success teams.

Brassica was co-founded by Youngro Lee, the Houston fintech entrepreneur who co-founded the investment platform NextSeed and oversaw its 2020 acquisition by New York-based Republic. Lee said the company’s services and application programming interface would be used on the back-end for clients to build upon when creating digital asset transfer services.

“The problem [with digital asset transfers that] Brassica is tackling is something I’ve dealt with since NextSeed,” Lee said. “When I joined Republic, they were dealing with it too. Brassica was a joint effort between the back-end and the public-facing side to create a solution where the client can build on top of our infrastructure.”

Lee, who joined Republic as COO as part of the 2020 deal before transitioning to become an executive vice president and head of Republic Asia, leveraged his previous connection with Mercury Fund Managing Director Blair Garrou for Brassica's seed round. Lee and Garrou have known each other for nearly a decade.

“I always respected Mercury and Blair because of what he meant to the Houston [startup] ecosystem,” Lee said. “After Brassica was ready and I built up my own network, I started talking to Mercury again, and I realized this is a great partner. Even when I was not so successful at NextSeed, Blair always treated me with respect.”

Another reason Lee wanted to return to Houston for Brassica was his belief that the Bayou City can expand its startup ecosystem beyond companies related to its traditional heavy manufacturing and health care industries.

“Houston, whether intentionally or not, has largely operated in a top-down manner where the firms and corporates with resources will decide the agenda of what gets funded, and I think the city needs to start with the entrepreneur,” Lee said. “At least now, there are a lot more organizations and passionate ecosystem builders, and that’s critical. But there needs to be more, and [supporting from the entrepreneur first] is a much more difficult question from the corporate and political strategy of this city.”

Recent events in the fintech industry, including the collapse of Silicon Valley Bank and ensuing conversations about financial regulations, worked in Brassica’s favor. The company had acquired its trust charter from the Wyoming State Banking Board around the time of SVB's collapse, which Lee said was a sign that Brassica’s API would be in demand.

“The fact that there has been so much disruption — not just in the digital crypto world but in the world of traditional finance — what has to happen is new innovation,” Lee said. “Bitcoin was created after the 2008 financial crisis. My view as an innovator and entrepreneur is that when there are disruptions, that is 100% the best time to build.”

After Lee joined Republic Asia, he and Garrou co-led a $15 million Series A funding round in August 2022 for Topl, a Houston-founded blockchain startup that moved to Austin.

Mercury’s other recent moves in the blockchain space include the recent promotion of Samantha Lewis to partner. Lewis serves on the board of directors at Topl as part of the Series A raise. Mercury also added Chicago-based angel investor Eddie Lou as a partner in March to bolster its Windy City portfolio.

Lee anticipates future developments in blockchain to be defined by the technology’s legal regulations. During his time with Republic Asia, he found that markets in Hong Kong, South Korea and Singapore approached blockchain regulation with a looser hand than in the United States, but he predicted both American and international regulations on the technology would converge.

“Every country that makes its own rules will set different precedents, and different things will happen,” Lee said. “Regulation is never bad — uncertainty is bad because people will be left guessing. Ultimately no matter what happens, even if the U.S. falls behind, it will still be a major player in digital assets because of the size of its capital markets.”

Mercury was ranked the No. 5 venture capital and private equity firm in the Houston area by assets under management last year, according to Houston Business Journal research. The VC fund was co-founded by Garrou and Aziz Gilani to target and invest in early-stage startups in the Midwest. In 2022, Gilani was named to the recently reestablished National Advisory Council on Innovation and Entrepreneurship, a federal initiative to strengthen U.S. entrepreneurship.