When I last connected with Michael Seaman, CEO of SwipeSum (a marketplace software for credit card processing), he had just made a choice that is virtually unthinkable within mainstream startup culture: He'd moved his company out of California and into the Midwest. Speaking to him today, he makes it clear that his unconventional move was the best business decision he could have possibly made.
When Seaman arrived in St. Louis in January of last year, he had just started working on SwipeSum full-time, taking just enough salary to pay the bills. Since then, SwipeSum has raised a $1 million seed round from St. Louis-based Angel investors and been awarded a $50,000 Arch Grant (one of several equity-free grants for entrepreneurs who locate their early-stage businesses in St. Louis). Seaman has grown his team to 11 full-time members and almost as many contractors; and the company has rented out a drool-worthy workspace that would have been out of reach in the Bay Area.
In the process, SwipeSum is proving that good things come to startups willing to travel off the beaten path and become pioneers in new startup frontiers.
"We've really put down roots here," Seaman says. "I think we've done a good job of letting St. Louis know we're here [and] that we want their support, but we're also willing to give back to get that."
It's a symbiotic relationship that's paying off in spades. "You just get so much longer of a runway for success here than you would in places where startups typically land," Seaman says. "We're not competing against hundreds of other technology startups for talent and resources, and the community really works hard to ensure that we succeed."
Here's a look at some of the many ways in which SwipeSum is reaping the benefits of this longer runway.
Enjoying the Perks of St. Louis Headquarters
Since moving SwipeSum to St. Louis, Seaman and his team have enjoyed a range of benefits.
For starters, there's the Arch Grant. The program offers $50,000 of equity-free capital along with pro bono support services to early-stage businesses that locate themselves in St. Louis for at least one year. It's intended to revitalize downtown St. Louis--and so far it appears to be working. In the relatively short time that SwipeSum has been headquartered in St. Louis, Seaman has already witnessed a gradual but steady influx of young startups.
The Arch Grant isn't the only financial support that SwipeSum has found in the Midwest. The company has also raised its seed round from a group of local Angel investors. "The group is all local St. Louisans," Seaman says, and it's comprised of individuals who have made billions in banking and processing. "I don't think we could have met them anywhere else."
Not only is SwipeSum enjoying plenty of financial support from the Midwest, but Seaman says his company is benefiting from access to a broad talent pool within the region. SwipeSum hired its product design and engineering team from within the Arch Grant network, and Seaman says the grant has also opened doors to other networking efforts. "The Arch Grant is a stamp of legitimacy for St. Louis startups; some of our biggest deals went through because the client knew we were Arch Grant recipients and wanted to support startup growth here," he says.
SwipeSum's access to talent also extends beyond the Arch Grants cohort. "With Washington University in St. Louis and St. Louis University being so close by, there's a huge amount of young talent available to us," Seaman says. "We are taking full advantage of that." His team has also been able to leverage local entrepreneurial networks, such as St. Louis's ITEN, to get their foot in the door with high-quality accounting and legal services.
The company is also taking advantage of its access to affordable real estate. The team moved its office to Laclede's Landing -- a historic riverfront neighborhood and the focus of a large revitalization effort from the city -- at the start of this year. Their new digs came complete with with exposed brick, lofted ceilings, and cobblestone streets just outside its door. "I looked at office space in LA before moving here, and I can confidently say that where we are now would cost well over $100,000 month in typical startup cities," Seaman says. SwipeSum rents the space for a fraction of that.
All told, headquartering SwipeSum in the Midwest "lets us spend money on growth instead of superfluous operating expenses," Seaman says. "If your goal... is to create a successful and sustainable business, why wouldn't you give yourself the best chances to do that?"
It Takes a Village: Getting and Giving Back
SwipeSum doesn't reap the benefits of its Midwest headquarters in a vacuum. Instead, the company endeavors to give back to the region from which it's received so much.
"SwipeSum gives our biggest gift away for free, whether you're in St. Louis or elsewhere," Seaman says. The company offers expert assistance in identifying the best payment processing solution at the lowest rates possible. "We try to prove ourselves [out of the gate] and create trust before a client's even signed on," Seaman says. "We want to become a trusted advisor first, then invite business owners to pay for our continued services." To its paying customers, SwipeSum offers continual payment processing audits, ensuring that businesses don't pay unnecessary fees or get stuck in restrictive contracts, among other services.
This strategy has created a strong base of accounts, Seaman says. "Not every business takes us up on the paid services, but that's fine. We've found that those who don't still enthusiastically give referrals, which really proves to us that this is a sustainable model."
Those accounts include mom and pop shops as well as small- to medium-sized businesses generating a couple million in monthly revenue. "St. Louis is a great place to operate. The culture of the Midwest region -- friendly attitudes, hard work, and community -- translates perfectly into our business model. When we help businesses save money, they're always happy to introduce their friends who need the savings too," Seaman says.
But those savings, Seaman says, are not the only benefit that comes from working with SwipeSum. "To get that perfect payments solution, we have to go through a pretty rigorous consultation process with each business," Seaman explains. "We get great insight into the operations of the business, but also the goals and aspirations of those who run them. If we can save a company $20,000 in a year, we know where that money is going, whether it be bonuses for employees or investment into marketing efforts."
"It's a better feeling than [working with] a faceless company," Seaman says.
While Seaman may miss the beaches of California from time to time, he sleeps soundly knowing that his company has more breathing room on its way to massive growth. "It's a bigger blessing being here... knowing that you have the longer runway (even without the plethora of tacos)," he says. "We'll continue growing, and, in time, maybe we'll open another office in LA or NYC."
But as for SwipeSum HQ, Seaman says the long-term plan is to remain in downtown St. Louis. "With what the state of Missouri and the city of St. Louis are doing for us, it just makes so much sense," he says. "I don't think it matters where your headquarters is located when you make a nine-figure exit."