Houston-based Mercury Fund, a venture capital firm investing in early-stage companies, closed its fifth fund worth $160 million, the largest round Mercury has closed to date.
Mercury Fund V was oversubscribed by $10 million. According to the firm’s Sept. 28 announcement, Mercury received commitments from university endowments, foundations and family offices with a focus in the Midwest. Mercury invests in companies based in regions that may struggle to attract investors based on the coasts.
An amended Form D that Mercury filed with the Securities and Exchange Commission showed that the firm had raised over $120 million for Mercury Fund V by March 2023.
The fund will continue Mercury’s strategy of targeting founders who are building software-as-a-service and data platforms. Mercury confirmed it has already invested in several tech companies with Houston presences. These include RepeatMD, which develops rewards programs for wellness spaces, and Brassica Technologies, which delivers transfer services between traditional banking institutions and those relying on newer innovations such as Web3.
Brassica closed its $8 million seed round in April, and co-founder Youngro Lee told Houston Inno that his relationship with Mercury Managing Director Blair Garrou — which formed while Lee was at his previous startup, NextSeed — was instrumental in securing the round.
“Over the past few years, there has been a tremendous migration of talent, wealth and know-how to non-coastal venture markets, and this surge of economic activity has further accelerated the creation of extraordinary new companies and technology,” Garrou said in a Sept. 28 press release.
While raising its fund, Mercury has also built out its team this year. In February, the firm promoted Samantha Lewis to partner with a focus on investing in data platforms, fintech and Web3, a new stage of the internet driven by blockchain.
Outside of Houston, Mercury brought in Chicago-based angel investor Eddie Lou to head up its investments in the Windy City, targeting business-to-business marketplace companies at the seed and Series A stage.
Other investments Mercury has recently made include a $43 million funding round for Austin-based Otto, an automation platform for veterinary clinics. That funding round also saw Mercury Venture Partner Heath Butler join the company’s board.
Mercury has been involved in some of Houston’s fastest-growing startups, such as e-commerce platform Cart.com, which moved its headquarters from Houston to Austin in 2021 and went on to achieve unicorn status in 2023.
Venture investment began a slowdown across the nation in 2022, and the Houston area was no exception. The collapse of Silicon Valley Bank in early 2023 added to the uncertainty of many startups, especially early-stage companies. Data from management platform Carta in August showed that seed deals nationwide fell from 880 in the fourth quarter of 2021 to 440 in the second quarter of 2023.
However, the same data showed that seed deals were becoming more geographically diverse in where startups raised capital, which is good news for Mercury. With 6.2% of all seed rounds, Texas had the second-largest share in the country, only behind New York, Carta reported.
