Startups like SnapCap a gift to the Holy City’s economy

By Robert Salvo

For most of Charleston’s history the industries that have supported the Lowcountry have also been the most visible. In an earlier era, this would have meant the cotton warehouses on our waterfront; a generation ago, it was the sprawling Navy Base. Today we see the economic engines of the Holy City whenever a container ship sails up the Cooper River, or when a horse carriage full of tourists clops by. While these important industries still define the landscape of the area, a quiet and less-visible revolution has occurred, bringing the modern knowledge-based economy here to the Lowcountry.

The increasing use of “Silicon Harbor” as a moniker for Charleston, first promulgated by Nate DePore of PeopleMatter, is a sign of the local technology sector’s scope and success. Comprised of long-established local players, like ATD and Blackbaud; massive multinational transplants like Boeing and Google; and scores of startups in every stage of growth and development, this sector is rapidly defining what it means to work in Charleston in the 21st century.

Steve Swanson is a trailblazer in the local tech industry. Capitalizing on lessons learned from the “Black Monday” financial crisis of 1987, he co-founded Automated Trading Desk in 1988 to computerize the trading of equity securities. In 2007 his thriving Mt. Pleasant firm was sold for $680 million dollars. “We built ADT … and by the time we sold it to CitiGroup, we had over 140 employees here in Charleston,” Swanson said.

When asked about the nascent tech sector in Charleston 20 years ago, Swanson commented, “Back when we stared ATD, it was ATD and Blackbaud. We tried to recruit a programmer to come to Charleston, [and they asked] ‘what else could I do if things don’t work out at ATD?’ It was tough to recruit people to Charleston back in those days.” Some of those recruits were even offered contracts that covered all expenses to return to their prior communities if their job in the Lowcountry didn’t work out.

“Those days are long past,” says Swanson. “The opportunities are huge … Charleston is known. We’re not New York, we’re not California yet, but … I think we’re poised to be Boston. I think … it’s as exciting a time as we’ve ever seen.”

His excitement is evident as we tour the modest-but-handsome office of SnapCap, a new alternative lending company headquartered on lower King Street. I’ve come here to chat with Swanson and SnapCap co-founder Hunter Stunzi. Stunzi is young: He graduated from The College of Charleston in 2007 and has a resume that gives ample evidence to the perils of starting a career during the Great Recession. He was a bellboy at the Wentworth Mansion, a credit card equipment salesman and even, very briefly, an auto mechanic — whatever it took to get by — before landing a position at Wells Fargo.

His time at Wells Fargo was marked by great personal success and he was rapidly made a Senior Credit Manager. From there he moved to Bank of America Merrill Lynch. During his time there as a credit manager and financial advisor, he gained insight into the process of small business lending and the many hurdles small business owners face securing a loan from a traditional bank.

Like many startups, SnapCap was born by identifying a straightforward problem. Small business owners need to focus on running their business; traditional banks require applicants to go through mountains of paperwork, then, if a loan is approved, wait four-to-six weeks for funding. SnapCap’s approach is fundamentally different. With a guiding principal of loaning to “people who can use money; not people who need money,” SnapCap uses advances in real-time business monitoring to base their loans off of a much smaller set of factors than traditional banks. This also allows them to come to a decision about the loan much more quickly, too. If a loan is approved, funding is made available to the client on the same day.

“We’re really challenging the banks in this space and the good thing for us is that the banks are in the penalty box. We are able to move faster and we’re creating efficiencies in a very inefficient market,” says Stunzi.

The other thing that makes SnapCap unique is its use of something the Holy City is known for far and wide — hospitality. Their business model is built on establishing personal connections. Borrowers who establish a reliable pattern of repayment are offered better rates or a higher borrowing limit. Typical clients might include those with seasonal businesses — perhaps more inventory is needed to supply holiday shoppers — or small companies looking to purchase new equipment to expand business. The mutually beneficial personal relationships that SnapCap fosters keeps the company top-of-mind for many borrowers’ financing needs.

Most small business owners discover SnapCap through their website, which is designed to fully educate borrowers on how the lender’s nontraditional service works.

“People apply online, they’ve got no idea what they’re being offered. You’ve got to be educated. A key component of SnapCap is allowing people to understand the product that we offer” says Stunzi. SnapCap will contact loan applicants directly by phone, often in less than an hour, to chat with them about their business and their needs. Only when everyone is comfortable does the application proceed.

Back to Steve Swanson of ATD; he’s in the offices of SnapCap because this November he made a major personal contribution to the company — not just of his money — but also of his time and knowledge as a strategic investor. “Just as ATD changed the nature of trading, I believe SnapCap will change the nature of business lending,” he says.

When I ask him why he wants to be a part of the young startup, Steve confides: “I think SnapCap’s attraction to me is that I’ve been there … I’ve made all the mistakes … Growth is challenging. I see most of the opportunities to invest in things around Charleston; I haven’t seen many opportunities to invest in something like this for the past several years. I’m thrilled to be a part of it. The next two or three years are going to be fun.”

I asked Stunzi for his thoughts concerning what the growth in creative technology jobs will do for the Holy City. After rattling off a list of some of the most prominent tech companies in Charleston, Stunzi says, “There are all these opportunities for younger people [to have] an opportunity to stay and make that first critical foray into the working world. In 2007, I was on Craigslist replying to ads.” When asked what the success of SnapCap means for our area in general, he said, “My ultimate goal is to have this … employ a couple hundred people in Charleston. I view that as money going back into the economy.”

Indeed it does. As Charleston garners an international reputation among tourists for our world-class restaurants, arts scene and quality of life, it is important to remember how much of the day-to-day spending in our creative economy is done by the young professionals of our local tech sector. This benefit might go as unseen as a midnight visit from the jolly old elf himself, but let there be no doubt: Parks are funded, plays are staged, houses are restored and so much more because of the growth of “Silicon Harbor.” That’s a holiday present for the Lowcountry we can enjoy all year round.