With the sudden collapse of Silicon Valley Bank, depositors have been rushing to find more risk averse alternatives to deposit their money.
One of the main beneficiaries has been Mercury, a company that provides banking services to startups. It just launched a new account option that provides customers with FDIC insurance of $3 million, 12 times the typical $250,000.
The San Francisco fintech can offer this because it is not a bank, but a service that deposits clients' funds in a network of banks, each with their own limit of $250,000 of FDIC insurance. Mercury is partnered with Choice Financial and Evolve Bank & Trust, which operate a "sweep network" of banks, which include Goldman Sachs and Capital One.
The collapse of SVB has brought to light the risks associated with depositing funds over the FDIC limit. Until the government stepped in to backstop all SVB's deposits, accounts with funds in excess of that threshold were at risk.
Mercury CEO Immad Akhund said on Twitter that the company worked over the weekend to launch the "Mercury Vault" product, which also includes risk management information on where funds are stored.
Akhund also said via Twitter that Mercury is receiving considerable traffic in wire transfers from SVB on Monday after the federal government's guarantee enabled SVB depositors to withdraw their funds.
Mercury was founded in 2017 and has since raised $177.73 million at a $1.6 billion valuation, according to Pitchbook. It has about 100,000 customers and processed $50 billion in transactions in 2022, according to TechCrunch.
Not to be outdone, another San Francisco fintech that provides banking services for startups, Brex, is touting its own supercharged FDIC limit maxing out at $2.25 million.
