Mercury expands FDIC insurance up to $3M through new Vault product

Mercury, a startup that provides banking services for other startups, is offering customers expanded FDIC insurance of up to $3 million via a new product in the wake of Silicon Valley Bank’s collapse. That’s 12x the industry standard for institutions of $250,000 in FDIC insurance that other institutions offer.

Immad Akhund, CEO and co-founder of Mercury, told TechCrunch that his team worked on the new product, called Mercury Vault, over the weekend. 

Customers, existing and new, with more than $3 million in their accounts will be prompted to move funds into Mercury Treasury’s Vanguard money market funds, which are 99.5% invested in U.S. government-backed securities (mutual funds predominantly composed of T-bills) and held 100% in the customer’s name. As the company continues to work on the product, customers will have the option to make that money movement automatic.

“So if you need to have $2 million in your operational account, we’ll make sure there is $2 million there so you can make payroll and things like that and the rest will be swept into the U.S. government, T-bills and mutual funds,” Akhund said. 

To be clear, Mercury itself is not a bank. Through its partnerships with Choice Financial and Evolve Bank & Trust it is able to provide its customers with access to “a sweep network” of other banks such as Goldman Sachs and Capital One.

With Vault, Akhund said, customers not only get expanded FDIC insurance of up to $3 million, deposits will also be spread across up to 12 different banks to spread out risk and assuage fears.

Vault also, according to Akhund, “will continuously monitor cash across accounts and recommend actions to keep every dollar as secure as possible.”

“Before Thursday, I think a lot of people were not thinking about who actually has the money and is it safe?,” he said.

Generally, since news of SVB’s woes became public, Mercury has had “a massive slew of signups,” he said. While its customers are predominantly startups, Akhund says the company also serves investors and has received inbound interest from VCs wanting to move money this past weekend as well.

Mercury has more than 100,000 customers and says it has been profitable since last August. It processed more than $50 billion in transactions in 2022, up from $23 billion in 2021. The company says that 50% of YC cohorts “choose Mercury as their banking partner.”  

Since inception, Mercury has raised $163 million from investors such as Andreessen Horowitz (a16z), CRV, Coatue and others. Its last round was a $120 million Series B that was announced in July of 2021.

Meanwhile, startup Rho said it has seen increased demand in its Treasury Management Account offering that offers up to $75 million in FDIC, something that it initiated when it first started in 2019 because it “knew companies would want an option to diversify their funds,” a spokesperson said. The corporate spend and cash management company in 2021 raised a $75 million Series B funding round led by Dragoneer Investment Group and has raised a total of $205 million in equity and debt financing.