Houston, Texas-based seed and early-stage VC firm Mercury Fund is seeking out entrepreneurs and innovati ve in software and science- based startups, targeting the central United States.
"We look for companies and entrepreneurs who have been very savvy in the way they have built their business," said Managing Director Blair Garrou. "It does'’t mean they haven’t raised any capital to date, but we like to find people who get the most out of their regional resources ."
Mercury F und takes the location of a company very seriously. The first question asked is, "Why are you based where you are?" It could be because the company originated in that town, or because the area is the best place for startups in its industry. "If it's the former, we try to get businesses to open up secondary offices where we think they will be more successful in hiring specialized development and/or technical talent," said Garrou. "If it's the later, we tend to get more excited because we can build a base for a business in that specific region," said Garrou.
Garrou suggests that in the beginning stages, startup companies should raise some seed capital on their own and create a talented advisory board from the industry. "We love it when a company has raised a few hundred thousand dollars that does'’t just come from general angel investors, but from angel investors who have expertise in the field in which the entrepreneur is growing their businesses," he said.
Breaking through a region's customer ecosystem is also impressive to Mercury Fund, as it demonstrates the company's ability to make sales nationwide. "I think many angel-funded companies in the middle of the country, who have early customer traction, still find themselves in the series A crunch, and that's where we are able to come in. We have been seeing more funds like ourselves searching for these businesses," said Garrou.
During the early years of Mercury Fund, the firm looked for other states outside of the southwest to target with their investment capital. The firm went to Michigan because of its activity with startup development organizations, like the Michigan Growth Capital Symposium (MGCS). "We saw hundreds of deals throughout the Midwest that were built exactly the way we like to see startup businesses: tenacious, capital efficient and solving real problems," said Garrou. "We had a relationship with a local venture business who invited us to the MGCS, saying that it was easily the best one- stop shop to meet a lot of people in the Midwest startup ecosystem." That was 6 years ago; Mercury Fund has attended MGCS ever since.