Houston’s Mercury Fund has raised its third fund, totaling $105 million in commitments.
The closing of Mercury Fund III, which made its first investment in October 2013 and its last a year later, brings the firm’s total capital under management to more than $200 million. This latest fund will make initial investments of between $100,000 and $2 million, up to a total of $5 million over the life of a company. Mercury’s previous funds totaled $20 million and $70 million, respectively.
“We believe that innovation doesn’t only happen on the coasts,” says Blair Garrou, Mercury’s co-founder and managing director. “With our track record and belief that entrepreneurship is a global pursuit rather than just a Silicon Valley pursuit, we have found more and more institutional investors believing in what’s going on in Texas, the Midwest, and Colorado.”
The “middle of the country” has become Mercury’s geographic footprint since its founding nine years ago. Still, many of its most notable successes have come from Texas. These include Alert Logic, a “security-as-a-service” software company that was acquired by Welsh Carson; BlackLocus, which provides retailers with data to help them make pricing decisions and was bought by Home Depot; and Infochimps, which provides software to manage big data and was purchased by Computer Sciences Corp.
“We were fortunate enough during this latest fundraising period to exit three companies successfully, and when you exit companies while you’re fundraising, it makes your job a lot easier,” Garrou says.
Mercury’s third fund has made early stage investments in both software and life sciences companies, including Apsara Therapeutics, a biotech company developing antibody therapies for the treatment of neuro-degenerative diseases; Apto, which makes customer and deal management software for commercial real estate brokers; Clean Chemistry, a physical sciences company developing oxidant chemistries for improved water management; Datical, which allows companies to digitize what is now a manual process of updating applications that run on databases; LISNR, a mobile platform enabling consumers to interact with media around them; and TrendKite, a provider of an online PR and marketing dashboard.
In addition to the focus on the country’s mid-section, Garrou says the fund prefers to work with startups that have come through local accelerators, many of which Mercury has existing relationships with.
“Since we helped launch a lot of these organizations, we work with them well,” he says. “Startups that go through those programs, they have been somewhat tested as, do they take advice well? Have they built a network? Can they articulate a vision? The basic blocking and tackling has been done by these organizations.”
