Mercury Fund Closes Largest Dedicated Fund to Invest in SaaS Startups Between the Coasts

December 18, 2024February 6, 2025 EquityExplained

In a significant development for the venture capital ecosystem, Mercury Fund has closed its fifth fund with $160 million in capital commitments. This amount surpasses the initial target of $150 million and is backed by existing investors and new limited partners.

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A Busy Month for Venture Capital Firms

This announcement comes on the heels of several other venture capital firms announcing new funds this month, including Mythos Ventures, Connect Ventures, Fuse, and Unconventional Ventures. This trend suggests that the venture capital landscape is experiencing a surge in fundraising efforts.

About Mercury Fund

Mercury Fund has been around for over a decade, previously known as DFJ Mercury before rebranding in 2013. The firm has established itself as an early-stage venture fund, with a portfolio of over 50 companies that have collectively created more than $9 billion in enterprise value.

Fundraising Efforts

The fifth fund had been in the works since 2021, while Mercury was deploying capital from its fourth fund. Garrou noted that the firm’s performance during this time period, including having "over 10 exits," made its limited partners very happy. When funding took a downturn in 2022, Garrou revisited conversations with LPs, who not only stuck with them but also doubled down on their initial investment.

A ‘Middle America’ Fund

Mercury’s model is focused on investing in founders building transformational SaaS and data platforms in smaller technology markets outside of the coastal tech hubs. This approach has proven successful for the firm, with Garrou noting that "during the last fund, we did over 80% of our investments in the Midwest."

Future Plans

The $160 million raised will be invested over the next two to three years, with the hope of achieving another great liquidity period in 2025. Following this, the firm plans to raise again in the future.

Key Takeaways

Mercury Fund has closed its fifth fund with $160 million in capital commitments.
The fund is focused on investing in SaaS and data platforms in smaller technology markets outside of the coastal tech hubs.
The firm’s performance during the fourth fund period, including having "over 10 exits," made its limited partners very happy.