Houston software startup pivots to provide digital networking solutions

What started as a way to protect your company from a sketchy business partner has turned into a digital networking tool. Getty Images

Several years ago, David Grimes had a business partner who played dirty. It wasn't until the trial that followed the business wrongdoing that Grimes discovered the man had a history of cheating companies out of money. Grimes envisioned a software service that used public information to research potential investors or associates before signing on the dotted line of a partnership.

"I wanted to find a tool that would alleviate that pain and that risk of doing business," Grimes says. "I couldn't find that tool."

When Grimes met private investigator, Daniel Weiss, at a Christmas party, he picked his brain about this idea of vetting business partners or investors. Turns out, that's exactly what Weiss did already. Together, the two co-founded Houston-based Snap Diligence, a software-as-a-service company that uses its custom algorithm to digitally investigate these potential associates.

The technology would data mine various public information avenues, such as Secretary of State documentation of business owners, managers, and directors, state district court records, and insurance records. It would look at all filings and legal cases of both the person and all the companies they have been associated with. It would even look at that person's contacts and see who you have in common and who you don't know about.

Unintended technology
Now that the tool the Grimes wanted finally existed, and Snap Diligence went into beta in April of 2017. The team reached out to all ages and industries to use the software. In January of 2018, they reconvened and looked at who was using the tool and how they were using it.

"They were mostly people in their 30s," Grimes says. "I didn't think they would have enough experience with risk to appreciate the tool. But what they were using it to connect to new opportunities."

Snap Diligence allowed the users to access new business connections and potential clients based on their already established networks.

"It's not LinkedIn where you sat next to your connection four years ago at a breakfast club," Grimes says. "This is information on people who are actually involved in a business together."

A banker approached Grimes and asked him to datamine all his clients to see all the potential business he could have by finding other companies a client is involved in but that doesn't yet use the bank for.

So, with this new tool, Snap Diligence pivoted about 3 to 4 months ago and now looks at first and second degree of existing relationships for the purpose of targeting new business clients.

"We started running this customer analysis work — and we had to rework our algorithm some — to spit out this batch mining process for customers and how you expand an existing customer relationship into a new opportunity," Grimes says.

The tool has been most popular with commercial insurance and commercial banking, Grimes says. Private equity has been a big player too, although it's not as big as a proponent since they have smaller client bases.

Growth plans on the horizon
The company has a few major clients coming in, Grimes says, and also expects to be able to mine third degree connections soon too. Snap Diligence operates in several states, but as more information is able to be pulled in, the tool will soon grow to more markets.

"SEC data is something we want to add fairly quickly, as well as real estate data," Grimes says. "The key is just importing more and more data that can further fill in the picture of someone's footprint."

With growth on the mind, Grimes recognizes that Houston has with venture and talent. Both are aspects the local innovation community has but needs more of.

"We have plenty of talent here in Houston, but it's harder to find the talent that doesn't mind going into a startup with the risk that comes with it," Grimes says. "Finding the right talent is difficult."

As a a part of its annual Inc. 5000 findings, the magazine named Houston the ninth hottest startup city in America. Photo by Tim Leviston/Getty Images

It's not just Texas' weather that's hot. Three Lone Star State cities made Inc. magazine's list of hot startups cities — and Houston came in at No. 9.

The list came out of the Inc. 5000 report — the magazine's list of the fastest-growing 5,000 privately-held companies in the United States. The list was ranked by the three-year revenue growth of each of the cities' companies.

Houston had a three-year revenue growth 117 percent with 84 Houston companies on the 2019 Inc. 5000 list.

"After Hurricane Harvey hit in 2017, the Houston area's construction industry grew tremendously to help rebuild and repair the storm's damage," the short ranking blurb reads, mentioning two Inc. 5000 companies in Houston: oil pipeline services company JP Services (No. 792) and contractor services firm CC&D (No. 1,973).

Houston beat out Dallas (No. 10) by just 4 percent three-year revenue growth and 10 Inc. 5000 companies. The article calls out Dallas for its "low regulations, zero corporate income taxes, and the Dallas Entrepreneur Center, or DEC, which is a nonprofit organization serving as a hub for startup networking, funding, and mentorship."

Meanwhile, Austin, which ranked No. 2 on the list, had a three-year revenue growth 259 percent, and has 87 Inc. 5000 companies this year. Austin was praised for its "high rate of entrepreneurship and job creation" in the article, as well as for having outposts for top tech companies like Amazon, Apple, and Google.

Here's the full list:

  1. San Francisco
  2. Austin
  3. New York City
  4. San Diego
  5. Atlanta
  6. Denver
  7. Los Angeles
  8. Chicago
  9. Houston
  10. Dallas

Earlier this month, Business Facilities magazine named Houston the fourth best startup ecosystem in the U.S., as well as the fourth best city for economic growth potential. Similarly, Commercial Cafe recently named Houston a top large city for early stage startups.

Susan Davenport, senior vice president of economic development for the Greater Houston Partnership, previously told InnovationMap that it's the city's diversity that keeps the city growing and resilient.

"The region's steady population increases, coupled with our relatively low costs of living and doing business, bode well for our economic growth potential reflected in this ranking," Davenport says.