Bitwise Industries furloughs its entire workforce. CEOs cite ‘unexpected’ financial duress
Acute financial issues have forced Fresno-based Bitwise Industries to furlough its entire workforce of about 900 employees in Fresno, Merced, Bakersfield, Oakland and seven other cities across the country.
“Several critical (financial) transactions either did not materialize or materialized unfavorably, and the quantum of that is quite large,” Bitwise co-founder and co-CEO Jake Soberal told The Fresno Bee late Monday. “We held an emergency board meeting today and the difficult decision was arrived at that it was in the best interest of the company to furlough all employees effective immediately.”
“We expect this to be a very temporary action by the board and executive team while we determine the next steps,” Soberal added.
Soberal and co-founder/co-CEO Irma Olguin Jr. said that employees were notified about 8:30 p.m. Monday.
Bitwise was esablished in 2013 as a self-described “mothership” for technology-oriented entrepreneurs and companies. The company has expanded – at times rapidly – to establish four locations in downtown Fresno, as well as growing its footprint in California and, in recent years, to cities in Wyoming, Colorado, Texas, New York, Ohio and, most recently, Chicago, Illinois.
But that pace of growth carries an inherent risk that the pace could not be sustained, they said.
Goldman Sachs, The Motley Fool and others invested $80 million
The company announced earlier this year that it had received an $80 million infusion of capital from a collection of investors including Goldman Sachs Asset Management, Citibank, The Motley Fool and the Kapor Center — described as the largest one-time investment Bitwise has received in its 10-year history. That investment was aimed at supporting the addition of Chicago as the newest Bitwise location and broadening the scope of technology services it can offer to businesses.
In addition to computer training and technology services, Bitwise serves as a landlord to tenants in its various locations in Fresno and its other cities. The company’s real estate purchases in Fresno have included its headquarters at Bitwise South Stadium on Van Ness Avenue near Chukchansi Park; Bitwise 41 at Ventura and R streets; the Bitwise Hive at Ventura Street and Santa Fe Avenue; and Bitwise State Center, in the old State Center Warehouse building on R and Inyo streets.
Soberal said Monday that the $80 million investment was actually funded in 2022; since then, the company’s financial picture has darkened.
“A company growing at the the velocity that Bitwise does depends on a meaningful number of (venture) transactions, revenue, debt and equity closing,” Soberal said. “This is a year where we simply lost too many times. That led us to a financial condition where we needed to take immediate and decisive action.”
“Building a company as fast as we have over the last 10 years is by design unsustainable,” Soberal added. “Venture-backed companies inherently carry risk in their effort to do something novel so quickly, and Bitwise is included in that.”
Soberal and Olguin said they could not disclose details of a specific trigger for the Bitwise board’s decision, but said the issues were not longstanding concerns. “This happened in a very short period of time,” he said. “The events that we’re dealing with that led to the furlough of our team were very new and very unexpected.”
The Bitwise facilities in Fresno and other cities serve as locations where small technology businesses can lease space, where students can receive training in software coding and website design, and where trained technology processionals can provide assistance to business clients on technology issues.
Soberal said third-party tenants leasing space inside its various campuses will continue to have access to their offices and workspaces. He added that restaurants operating in its Fresno locations aren’t affected by the furloughs.
This is a developing story that will be updated.
