Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.
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Business banking startup Mercury, founded in 2020, is now launching a consumer banking product. Mercury today serves more than 100,000 businesses, many of which are startups, via its B2B practice.
The expansion is a natural move for the company and one that has been in the works for a couple of years, according to Immad Akhund, Mercury’s co-founder and CEO.
“We already have a few hundred thousand users of our business banking product, and a lot of people have expressed that they want a personal banking product,” he told TechCrunch in an interview.
While there are plenty of neobanks, many of them “focus on the underbanked. It’s not a great market for power users” who need features like wire transfers or support for multiple users, features that Mercury’s service offers, according to Akhund. Other features are of the type expected by banking power users: multiple debit cards with custom spending limits, access up to $5 million in FDIC insurance through its partner banks and their sweep networks, and interest-bearing savings accounts.
Essentially, Mercury hopes to convert many of its business clients into customers. It’s not going after the masses like say Chime or Dave.
The expansion into personal banking comes at an interesting time for Mercury, which recently made headlines for being the target of federal scrutiny around its practice of allowing foreign companies to open accounts through one of its partners, Choice Bank.
According to a report by The Information, the FDIC was “concerned” that Choice “had opened Mercury accounts in legally risky countries.” Officials also reportedly chastised Choice for letting overseas Mercury customers “open thousands of accounts using questionable methods to prove they had a presence in the U.S.”
And that’s not all. The FDIC also wasn’t happy that Choice hadn’t “vetted a compliance system Mercury was using, which the agency said was flagging a curiously low number of suspicious transactions.”
Adding fuel to the fire, Mercury also earlier this year reportedly told users with Evolve Bank & Trust-issued debit cards that those cards would no longer work where the merchant has a legal address in 41 countries, including Turkey, Ukraine, Cuba and Iran. (Evolve is also a partner of Mercury’s.) When TechCrunch asked about these allegations, the company declined to comment.
When asked about The Information’s report, a Mercury spokesperson emphasized that the company is investing in its risk and compliance teams. The person also said the fintech partner banking market as a whole has been the target of more regulatory scrutiny.
Alexey Likuev, who led the buildout of the consumer offering for Mercury, acknowledges there are “definitely more rigorous regulations around consumer protection” and said the company has been mindful of those regulations when it built out its consumer product.
But success in B2B banking doesn’t automatically queue up Mercury to handle consumer banking. Each has differing regulations and compliance issues, noted Gartner analyst Agustin Rubini. Risk management for personal banking, for instance, is about assessing the individual’s financial stability, “which can be less predictable compared to businesses,” he said.
More than that, adhering to stringent regulatory requirements can be “challenging” for startups, he warns. “The complexities increase when partnering with a bank due to the additional layers of regulation that apply to banking services,” he said. “This includes everything from anti-money laundering (AML) protocols to meeting capital requirements.”
Rubini added that partnering with a bank can help the startup by providing an initial platform and compliance framework, but then scaling up operations to a larger customer base can open up a different can of worms. Startups need “substantial capital and strategic planning” to do that well while staying competitive, and without running afoul of regulators.
Cesare Fracassi, associate professor of finance at the University of Texas at Austin, also told TechCrunch that business and consumer banking are “two different beasts, two different types of services.” But he’s a bit more bullish on fintechs trying their hand at both because he does see “obvious synergies involved in owning both the business and person” in the banking space.
That’s one of the main reasons Mercury is expanding in this direction. It could leverage much of the software powering its B2B product for its consumer offering, Akhund said.
It’s also not the only fintech thinking like this. Onyx Private, with a similar offering, recently did a reverse move, pivoting from B2C to B2B.
Besides earning revenue off of interchange fees and the interest rate spread, Mercury will make money by charging users an annual subscription fee of $240 upon the first deposit and then annually after that. Last year, it touted a big bump in business following the SVB crisis, and a recent report from Kruze Consulting showed that 40% of startups created after the SVB crisis have an account with Mercury.
The company said it’s had seven consecutive quarters of cash flow and EBITDA profitability as of March 2024. While it would not reveal hard revenue figures, it also claims that its new revenue grew by 180% last year while its customer base climbed by 60% and transaction volume by 90% to $95 billion as of January 2024.
With that growth, the startup has been hiring. Presently Mercury has 620 employees, compared to 440 at the start of 2023.
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Welcome back to TechCrunch Mobility — your central hub for news and insights on the future of transportation. Sign up here — just click TechCrunch Mobility — to receive the newsletter every weekend in your inbox. Subscribe for free.
It was another wild week in the world of transportation, particularly in the EV startup and automated driving industries. Sure, Cruise got our attention by announcing a return of sorts. But there’s a lot more to read about, including Indian ride-hailing giant Ola exiting the U.K., Australia and New Zealand; a feature on a New York–based startup that wants to bring curbside EV charging to lampposts; Uber Eats launching a TikTok-like video feature; and contract manufacturer Magna piloting humanoid robots developed by Sanctuary AI.
Oh, one more thing — reporter Rebecca Bellan is back! I know readers missed her, so show her a bit of love by sending her some tips at rebecca.bellan@techcrunch.com.
Let’s go!
Founders, investors, engineers, policy wonks and others tell us things. And we’re here to pass along the verifiable information that those little birds have shared with us.
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Just a bunch of deals this week!
Basemark, a Finnish company that developed AR and computer vision software used by automakers, raised €22 million ($23.6 million) in a Series B round led by ETF Partners. Other backers include Finnish Industry Investment, Constructor Capital, Business Finland, the European Innovation Council and private investors.
Bumper, an automotive fintech startup sector, raised £2 million in a Series B extension round that included backing from Suzuki Global Ventures and Marubeni Ventures.
Carrar, an Israeli startup that provides battery modules and thermal management systems for EVs, raised $5.3 million in a Series A round that included new investors Salida B.V., OurCrowd, and NextGear, as well as current backers Gentherm, NextLeap Ventures, Dive Digital and others.
Exoes, a French-based startup that developed battery cooling technology for EVs, raised €35 million ($37.5 million) from BpiFrance and Meridiam Green Impact Growth Fund.
HysetCo SAS, a startup that rents hydrogen-powered EVs to taxi drivers in Paris, raised nearly €200 million ($218 million) in a round led by Hy24. Raise Impact and Eiffel Investment Group also participated.
Yoshi Mobility, a Nashville-based startup that developed an app to offer drivers preventative maintenance, virtual vehicle inspections and electric vehicle charging, raised $26 million in a Series C round led by General Motors Ventures. Bridgestone Americas, Universal Motors Agencies and Shikra Limited also participated.
The National Transportation Safety Board (NTSB) said the driver of a Ford Mustang Mach-E who crashed into a stationary car in Texas in February was using the hands-free driver-assistance system known as BlueCruise. This is the first known fatality resulting from a crash involving the use of BlueCruise. The NTSB announcement came a day after the safety board announced it’s probing a second fatal crash near Philadelphia where Ford’s driver-assistance system may have been active.
GM’s self-driving car subsidiary Cruise is back. Sort of. The company is redeploying robotaxis, but not in its home city of San Francisco. Instead, Cruise is setting up shop in Phoenix and all of its autonomous vehicles will be driven manually by employees. Here’s the odd part: Cruise says it will be creating maps and gathering road information in Phoenix, a city where it has had a presence (and has driven autonomously) since at least 2020. That means it has mapped these roads before.
Going all the way back to mapping has me a bit confused. Is this theater or does Cruise see a need to restart its entire process due to concerns about the underlying technology?
Cruise has also petitioned California regulators to reinstate its permits to operate in San Francisco. Will we see the company mapping its hometown yet again, or will it jump back in with a robotaxi service?
Meanwhile, Waymo officially launched paid rides in Los Angeles this week. We previously reported on California regulators’ approval of the Alphabet-owned company to charge for its robotaxi service in the city. The service is starting out small and will build based on demand and performance metrics, a Waymo spokesperson told TechCrunch.
Elon Musk’s decision to green-light a robotaxi over an affordable EV might cost the company its lead, TC reporter Tim De Chant writes.
Exponent Energy, the Indian battery-tech company that claims to have developed 15-minute charging technology, has partnered with auto manufacturer Omega Seiki Mobility to deliver a passenger three-wheel EV with those rapid-charging capabilities.
Faraday Future is now grappling with two internal whistleblowers. Both former employees have filed lawsuits claiming the troubled EV company has been lying about some of the few sales it has announced to date. They also claim founder Jia Yueting has “weaponized” the EV startup’s HR department to retaliate against anyone who speaks up about these alleged misrepresentations.
Lucid Motors delivered more EVs in the first quarter of 2024 than it has in any other quarter, though it set the record by a very slim margin.
Tesla dropped the monthly subscription price of its “Supervised FSD” (formerly known as “FSD Beta”) to $99, down from $199, in a bid to get more dollars and data from drivers.
Lyft and Uber said they will pause on their planned exit from Minneapolis after city officials decided to delay the start of a driver pay raise by a couple of months.
Check out this deep dive into Neural Concept, a company that’s using AI to help engineers make more aerodynamic vehicles for racing, automotive and aerospace industries.
I’m back in a Mercedes EV, this time a 2024 Mercedes EQE 350 4MATIC. The model retails at $77,900, not including the destination fee. The version I drove came in at $97,615, due to all sorts of options, like a 10-degree rear axle steering system, head-up display, air suspension, AMG exterior and a $1,250 driver-assistance system.
There are a number of improvements from the previous model year, including a new braking system, a heat pump to help improve driving efficiency in winter conditions, a 20-mile improvement in battery range, 20-inch wheels, power opening port door for charging and a better user interface (in my opinion) on the central infotainment.
What I really wanted to try was the advanced driver-assistance system, and specifically the automatic lane change feature, which I had yet to test.
Within the infotainment center, the driver can choose either “manual” or “automatic” lane change options. When the automatic feature is selected and the ADAS is on, the vehicle will make automatic lane changes without driver input. Here’s how it works. I was driving in the right lane on the highway with ADAS engaged. As the car approached slower traffic, an arrow appeared on the instrument cluster (see photo), the system turned my indicator on and then made the lane change. This can be overridden by holding the steering wheel and keeping it in the lane.
My thoughts? The system worked seamlessly and I could see using it on occasion. The question is whether drivers want to cede that kind of control.
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