Mercury raises $200 million and targets AI startup banking

The digital banking platform Mercury has raised $200 million in new funding, achieving a valuation of $5.2 billion as it positions itself to serve the burgeoning wave of artificial intelligence startups. The funding round, announced Wednesday, was led by investment firm TCV with participation from several existing backers.

The investment underscores continued strong interest from venture capital in companies tied to the AI sector. Mercury, founded to serve technology startups, reports it now works with more than 300,000 customers, which it says includes one in every three U.S. startups. Its client roster includes AI-focused companies such as coding platform Lovable, voice AI startup ElevenLabs, and backend platform Supabase.

Company executives argue that the rapid development cycle enabled by AI tools is creating a new class of entrepreneurs who expect their financial services to operate at a similar speed. Mercury CEO Immad Akhund stated that AI is compressing the time between an idea and a functioning business, creating an opening for newer fintech players to compete with traditional banks that have long dominated startup banking. He noted significant recent growth driven by...