Banking for Startups with Mercury

Immad Akhund is the founder and CEO of Mercury, a bank for startups.

Mercury, which launched to market in April, has raised $26 million from Andreessen Horowitz and a number of others, including the founder of Silicon Valley Bank, a respected player in the startup banking space.

Mercury offers FDIC-insured checking and savings accounts, along with payments, cashflow analytics and API-access to its customers and plans to continue rolling out functionality.

The startup banking space is hot, with players like Brex and Divvy capitalizing on the credit card and corporate spend side, and new players like Mercury exploring banking more comprehensively.

We hope you’ll bear with us on audio quality today. We picked up a bit of background noise while recording, but the conversation itself is great.

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Thank you very much for joining us today. Please welcome, Immad Akhund.

Will:

I think I first heard about Mercury while talking to Sankaet from Synapse. He was listing off the companies he was most excited about working with, and if I remember correctly, you guys were close to the top.

So, just to kick us off — in your own words, tell us about Mercury.

Immad:

Sure. Mercury is building banking for startups.

You can sign up online, and we provide a checking account, a savings account with 1.5% interest, and debit cards. Beyond that, we're creating a modern banking experience.

That means things like APIs integrated with your bank, being able to search your transactions from three months ago with ease, and sending money in just a few clicks.

We’ve essentially rebuilt the banking experience from the ground up, based on what you’d expect from a modern product-focused company.

Will:

Okay, so what does the typical company signing up for Mercury today look like? Can you describe that kind of customer?

Immad:

Yeah, there's definitely a variety.

In theory, we're open to any U.S.-based company — although the founders themselves don't have to live in the U.S.

Our sweet spot is really seed-stage tech companies or early-stage founders who think of themselves as startups. That’s a great fit for us because they’re usually not deeply entrenched in a legacy bank, the founders can make quick decisions, and they tend to be much more product-oriented.

They can immediately see the value Mercury provides.

That said, we do see a broad range — from smaller SMB-type companies to much larger, later-stage startups, even Series A and beyond. But early-stage tech is definitely our core.

Will:

How would you characterize the key differences between a seed-stage startup signing up with Mercury and, say, a traditional small business in the U.S.?

Are they fundamentally coming to you for different reasons? And is there specific value you offer to tech-native companies that a traditional widget manufacturer might not be looking for?

Immad:

Yeah, that’s a good question. There are definitely some dynamics that make seed-stage startups very different from traditional SMBs.

For example, a seed-stage company might raise $2 million and expect those funds to land in their account without any issues. But in traditional SMB banking, that kind of deposit would trigger all sorts of red flags.

So from a fraud and compliance perspective, it's important to understand the expected behaviors of the segment you're serving.

Beyond that, the differences are largely around features. Something like an API would be completely irrelevant to a traditional widget manufacturer — but for a startup, it might be core to how they operate. That’s where we’re focused, and we’ll continue building more of those types of features.

Another big difference is how we think about integrations. For example, a restaurant might care more about handling cash, whereas startups don’t touch cash at all. Any company that does heavily deal in cash probably isn’t using Mercury.

Digitally native companies care deeply about connectivity. Right after launch, we spent a lot of time integrating with platforms like Plaid, QuickBooks, and Xero. We wanted to be a modern bank that seamlessly plugs into the broader ecosystem of tools startups are already using.

And because our customer base is entirely within that bracket, and we deeply care about solving for them, we continue building toward that standard.

The other important piece is delivering a complete banking experience. Startups don’t just want a place to park money — they’re trying to become big companies. That means they have high expectations for completeness.

Features like international wires, receiving global payments, or sending checks — those aren’t just nice-to-haves, they’re expected. Our goal is to be a full replacement for a traditional bank. For most of our customers, we are.

So we have to offer that breadth of features in order to meet their needs.

Will:

You described your customer base as a mix of tech-focused startups and some more traditional SMBs.

To what extent do you view your strategy as building a proposition tailored to a specific vertical segment?

Traditionally, SME banking has been defined very broadly — covering businesses with anywhere from $500,000 to $100 million in revenue, or 10 to 250 employees.

That’s a massive portion of the economy, ranging from tiny companies to publicly traded mid-sized businesses. Some have finance teams, others don’t. Some operate internationally, some don’t. Some have accountants, and some don't.

So are you building Mercury as a platform that’s broadly relevant — where different users find different value — or are you aiming to serve a very specific segment and win 100% of that market?

Immad:

I think it’s more the latter.

One thing that’s unique about the U.S. is the sheer size of the economy — and by extension, the banking sector. So even if we just focused on startup banking, that alone could be a $10 billion+ opportunity.

I’m not just throwing out numbers — Silicon Valley Bank is worth around $13 billion, and they only serve venture-backed businesses.

So for us, step one is doing a very, very good job serving startups — owning that segment. That’s a meaningful business on its own.

Of course, I have unbounded ambition. At some point I’ll say, "Once we nail startups, we’ll expand into other areas." But I don’t think we’ll run out of opportunity, or even product challenges, in that segment anytime soon.

For a long time, we can stay focused and go deep in that space.

Will:

How important is API access to your customer base?

Is that a core reason people choose Mercury, or more of a nice-to-have? And how do you think the relationship between businesses and banks will evolve over time, especially as it relates to integration?

Immad:

We only launched our API last week, so it's still early days for us.

But for me, there are two parts to it.

First, I do think that for around 10 to 15 percent of our customers, the API will become a core part of their relationship with Mercury. They’ll use it to pull financial stats into internal dashboards, or send payments through the API. That kind of integration will be really valuable — both for them and for us — especially because no other bank really offers that experience. It's something I'm genuinely excited about.

The second piece, which is still in very early stages, is around ecosystem integrations.

Now that we have an API, there are a lot of interesting third-party players who can extend our services — like enabling payments through another interface using a Mercury account, or pulling in transaction data to trigger Slack notifications, and so on.

So those are the two key areas of opportunity.

Building APIs was always a core part of the vision I had for Mercury, and I'm excited to see it come to life.

It might turn out that only 15 percent of users deeply engage with it — and I’m totally fine with that.

Some of these capabilities are what I’d call "future-need features." You might not need them on day one, but we want to make sure we’re ready when you do.

Will:

I think it's super relevant, as you say.

I can absolutely imagine customers in the segment you’re targeting building their own dashboards — wanting to view financial and banking data as part of general business operations, or routing payments in unique ways.

And at the same time, building a banking product that’s open-API-native gives you options. You can either direct those tools to your customers for their own use, or you can use them to build out an ecosystem.

On that point — the ecosystem — are there natural extensions of where you expect Mercury to go?

For example, do you see Mercury facilitating lending to businesses through partners, even if you're not offering loans directly, but doing so via seamless API access or integrations?

Immad:

Yeah, that’s a good question.

We’re definitely open to those types of opportunities. When it comes to lending specifically, we’d have to be thoughtful about which types of products we introduce and how we integrate them.

If we were to offer something ourselves, we’d want it to feel very seamless — deeply integrated and true to the overall product experience. Of course, another company could use our API to offer those services, but if we put our name on it, we’d want to make sure it meets a very high standard.

That said, we’re still very early. We only launched in April, and things have gone really well so far. But one thing that’s especially true in banking is that there’s just so much you can do.

There’s lending, deeper payment functionality, various financial products — the list goes on.

So for now, we’re very focused on the depository side. That’s where our energy is. There’s still a lot of work to do there, and I don’t want us to take our eye off that ball by spreading ourselves too thin.

That’ll remain our focus for at least the next year or two.

Will:

Can you talk about your current operating model — specifically, the partners you work with to deliver the service — and how you see that evolving over time?

Immad:

Sure.

Yeah, you mentioned Synapse — that’s our main technology partner. They integrate with a bank called Evolve Bank & Trust, which is where most of our accounts are held here in the U.S.

I know you're more familiar with the UK, but in the U.S., it’s actually quite common — almost standard — for challenger banks to work with partner banks. That model lets the bank handle the regulatory and compliance side of things, while we focus on what we're good at: the customer experience and the product layer.

Right now, that model is working really well for us.

In terms of how it evolves — I think we’re more focused today on improving the customer-facing experience than making big changes to the backend infrastructure. But of course, over time, that could change.

Will:

Right. If you step back, I’ve come to the personal conclusion — and I’m curious to hear if you agree — that the “bank-as-a-service” layer is obviously critical if you want to offer checking accounts, debit cards, payments, and other financial products.

But it almost becomes a strategic question.

Do you go deeper into banking itself and aim to differentiate through the core transaction account — monetizing that directly, optimizing your entire stack, and maybe even pursuing a banking license one day?

Or, alternatively, do you treat the transactional account as important but commoditized, and focus your differentiation on building a robust technology layer around it — tools like payroll, accounting integrations, invoice creation — things that help your customers actually run their business more easily?

For example, Tide in the UK is a well-known business banking service for small and micro businesses. They’ve opted to focus on platform value around the account rather than building core banking infrastructure themselves.

How do you think about that kind of decision in the context of Mercury?

Immad:

That question definitely sounds like it’s coming from someone who’s built a bank before.

From our perspective, we’re probably a little more on the Tide side of that spectrum. I don’t think it’s fully binary, though. In general, things like where the money sits or what the exact API layer looks like aren’t things most customers care about.

There’s certainly some innovation you can unlock by having more control — it can be nice to own the experience end to end, and yes, you might be able to extract more margin.

But from my point of view, it’s really about delivering the best experience to customers. Sometimes that means bundling more deeply. Other times, it just means building a richer, more useful feature set. That’s where we want to focus — on what customers actually care about.

That said, there are areas where more verticalization makes sense — like card processing, for example — where you can deliver a better experience by going deeper on the infrastructure side.

So we’re not dogmatic about it. I don’t think we’ll fully outsource all of finance and only focus on the product layer. But to me, the financial backend is increasingly a commodity, while the experience layer is where the real differentiation happens.

Will:

What’s the monetization model right now?

Immad:

There are two main parts. First, we issue debit cards, and in the U.S. the interchange on debit can be quite good — that’s one revenue stream.

Second, we generate revenue from the deposits we hold with our partner bank through a rev share model. We do pass a good chunk of that on through our savings accounts, but what's left still adds up to a solid business, especially since we’re targeting startups that have typically raised between $1 million and $20 million.

Will:

You mentioned Silicon Valley Bank earlier as a point of comparison. If I’m not mistaken, one of the powerful things about their model is banking both the startup side and the VC side — which gives them visibility and control over cash flows across the ecosystem.

I imagine that would be pretty compelling. Is that something that factors into your thinking at all?

Immad:

Yeah, Silicon Valley Bank actually does a pretty good job of banking VCs.

I don’t know if that’s something we’re really looking to get into in a meaningful way. There’s definitely some appeal, but the use case is quite different.

Startups use their bank accounts operationally. They care deeply about their finances, and the founders tend to be product-driven — which makes what we’re building resonate strongly.

VCs, on the other hand, typically receive a lump sum, disburse capital, and the rest of their spend is usually run through an Amex Platinum or similar. So I don’t think our value proposition is quite as strong for them. It’s not a segment I’m focused on going deep into.

That said, we do think about it, and we do have some smaller funds using Mercury. We’re open to serving them, but I don’t see that as our primary entry point.

Will:

Just last week, at the time of recording, I saw that Brex announced some kind of transaction or cash account.

That’s a company I imagine you’ve taken a close look at. It seems like they’ve really hit a sweet spot in terms of providing credit to early-stage businesses.

Do you have any thoughts on their model or takeaways from how they’ve approached things?

Immad:

I’ll start with Brex Cash.

From our perspective, it's really the first "startup-y" competitor we’ve seen — so yes, we definitely pay attention to it.

That said, it's not actually a bank account. And they go out of their way to say it’s kind of a bank account but not a bank account, which from a product positioning standpoint feels confusing.

There are also some obvious limitations. They don’t support check deposits. They don’t support international payments. So I find it hard to believe that a serious startup would want to use them as their primary bank account.

Of course, Brex is a very well-funded company. They’ve onboarded a lot of early-stage startups, including some that could be future Mercury customers, and they can cross-sell against that base — so it’s definitely something we consider strategically.

But the way I see it, we’ve been thinking about this space for six or seven years. Our focus is narrow and deep. This is the only thing we’re working on, and we’re building a product with real depth.

Compared to that, Brex Cash feels like a side project for them.

Will:

Looking beyond the product, if you reflect on how Brex has delivered on startup demand for credit — something that’s traditionally been difficult for banks to provide — is there anything in that journey that you look at and draw lessons from?

Immad:

One thing that’s pretty interesting about both Brex and Stripe is that you can grow very quickly within the startup ecosystem — and not necessarily just through heavy marketing.

Brex has spent a lot on marketing, but both they and Stripe have shown that there’s a powerful word-of-mouth effect when you build something startups actually need. That was always part of our thesis at Mercury, and it's encouraging to see it play out in the market.

There’s real demand for fintech products that are designed specifically for startups.

When we launched, we offered a business bank account that was tailored for startups — but we hadn’t yet built the API or many of the deeper features. Even so, we saw immediate traction. People really wanted it, and adoption grew quickly.

It’s clear there’s meaningful demand for well-crafted financial tools built with startups in mind.

Will:

You recently raised what I believe was a $20 million Series A, announced just a few weeks ago.

I’d love to hear more about your experience communicating Mercury’s vision to the investment community — and how that process played out.

Immad:

Yeah, I think we’ve been pretty fortunate in terms of timing and the way the investment community currently views fintech.

Fintech is a bit of a unique space. At the seed stage, it doesn’t always get a lot of attention — it can be hard to raise early. But once you show product-market fit and some traction, there’s a lot of capital available.

You see these massive rounds for companies like Robinhood, Coinbase, and others. Investors recognize the potential because the market size is so large — that’s a major checkmark in your favor from the outset.

There’s also been a growing narrative around startups building for other startups — and a number of blog posts and tweet threads have helped popularize that idea. Most of those arguments apply to us, so when we went out to speak with VCs, we found they were generally very receptive.

The idea made sense to them. The market made sense. We had strong metrics and a solid team. A lot of the boxes were checked.

That said, even in favorable conditions, founders tend to make things harder for themselves by trying to do big things — and we did try to raise a relatively large round, earlier in our lifecycle.

It wasn’t trivial, but it was successful. We had a lot working in our favor.

Will:

You mentioned that the product launched in April. What has the initial traction looked like since then?

Immad:

Yeah, it’s been pretty incredible.

Most of the time when I’ve launched products in the past, the experience is: you launch, and then… nothing really happens. You need to ramp up a sales team, spend on ads, chase down early users, and basically beg people to try your product.

Mercury’s been totally different.

We launched, and from day one we started growing — and it hasn’t really stopped. For the last six months, we’ve consistently grown over 40% month-over-month across most key metrics.

It’s been a pretty wild experience.

Of course, keeping up with that kind of growth hasn’t been easy. When we launched, we didn’t even have a customer experience team. And in banking, you quickly realize how many edge cases you need to account for — like what happens when someone from Puerto Rico signs up, or if a founder uploads the wrong incorporation documents.

You spend a lot of time ironing out those workflows. Then there’s fraud to deal with, which adds another layer of complexity.

So the last six months have really been about managing that growth and getting systems in place to support it. Our team’s done a great job of staying on top of it.

Now, I’m excited that we’re finally in a position to go back to innovation. We’ve launched our API, and there’s a lot more cool stuff on the way.

Will:

What have some of the biggest learnings been for you — both in building the proposition and then operating it live in the market?

Immad:

One thing that’s been really interesting for us is discovering just how many people have U.S.-based companies but don’t actually live in the U.S.

There are lots of reasons for this. In some countries — places like Germany or Russia — it can be really difficult to raise foreign investment while operating a local entity. So founders often set up U.S. companies to run their businesses.

And increasingly, these are global companies. They’re digital-first — selling SaaS products or other online services — and there’s no reason they wouldn’t be selling to U.S. customers as well as to their local markets.

Then there are expats. There’s this whole swath of people who need U.S. business banking but don’t live in the country — and that’s become a meaningful segment for us.

It’s not the majority, but they’re a very vocal audience. They love Mercury because we’ve given them something they couldn’t easily get before.

I’ve talked to people who were literally planning to fly to New York just to open a bank account, and now they don’t have to. They can use Mercury instead. That’s been a really cool — and unexpected — discovery.

Another big learning, more from an entrepreneurial perspective, is just how hard it is to gauge demand for something like this before you launch.

Before Mercury, we talked to a lot of people — and while some were encouraging, it’s rare to get overwhelming validation for a product that takes a year and a half to build.

So you really have to stick to your vision. You get it built, you launch it, and maybe only 1% of startups are ready to sign up on day one — but 1% of a few hundred thousand startups is still a lot of people.

That’s always hard to see when you’re in pre-launch mode, and people don’t yet fully understand what you’re building. But once you go public, the real demand becomes clear — and that’s been one of the most validating experiences for us.

Will:

What’s the plan for the investment round you recently raised?

Is the focus mostly on marketing and growth, building out customer support and operations, or continuing to invest in product?

Immad:

It’s mostly about hiring — people, primarily.

On the marketing side, we don’t spend a lot to acquire users, and we generate revenue from the users we already have. So the investment isn’t heavily skewed toward paid growth.

At least half of the funding is going toward engineering, design, and expanding our product team.

There are also other critical hires we need to make — for example, in customer experience, legal (we’re hiring a general counsel), and operations. Fintech and banking tend to come with a certain level of complexity, and you usually end up needing twice as many people as you originally expected to get things done right.

So yeah, the majority is going toward team growth.

That said, we do have some larger non-headcount expenses. For example, we’ve got billboards up in San Francisco right now — and those aren’t cheap. So a portion of the round is going to brand awareness and marketing, but the primary focus is still team and product.

Will:

Excellent. Well, it sounds like you’ve built an amazing early product, and the rapid adoption really speaks for itself.

I can completely understand why businesses are excited to use it. I wish you and the team all the best and look forward to following your progress.

Immad:

Thanks, Will. I appreciate you taking the time to talk with us. Let’s definitely keep in touch.