When Irma Olguin and Jake Soberal founded Bitwise in 2013, they started it with the intention of “fixing” their hometown of Fresno, California using the tools of tech.
Crunchbase News: LatinX-Led Bitwise Raises $27M Series A To Bring Tech Hubs To ‘Underdog Cities’
Check out Riff City Strategies’ longtime partner Bitwise Industries in the article below.
Crunchbase News – June 20, 2019
Four and a half years into doing work in Fresno, the pair recognized that providing event space, office space, mentorship, and other resources for underserved communities—called an “ecosystem solution” by the duo—was potentially portable. But if they wanted to expand to other so-called “underdog cities,” they were going to need some external capital to do it.
So this week they announced a $27 million Series A raise led by Kapor Capital and New Voices Fund, marking Bitwise’s first institutional financing. The funding also includes a major investment by the Quality Jobs Fund, a project of the New World Foundation seeded by the Federal Home Loan Bank of San Francisco. I talked to Olguin to better understand what the company is doing, and I was surprised by just how much it’s got going on.
The startup manages about 250,000 square feet of real estate in Fresno that is leased to tech tenants. And on top of that, it’s also an investor and incubator, having spun out seven portfolio companies since its inception.
Now it’s looking to take the work it’s done in Fresno to other cities across the country with a specific set of criteria. It’s still working to identify those cities but Olguin said Bitwise will start with Bakersfield, Calif. Other potential markets include Tucson, Ariz., El Paso, Tx., and Milwaukee, Wisc.
The company has just over 100 employees and has doubled revenue year-over-year since inception, according to Olguin, who serves as Bitwise’s CEO. Its revenue stream comes from three sources: its education program, Geekwise Academy, which trains people to code, with a focus on marginalized groups; its commercial estate portfolio produces rent from leases to the rehabbed buildings it’s purchased in downtown Fresno and from Shift3 Technologies, a custom software development shop that it formed that pairs senior talent with entry-level programmers from Geekwise Academy to build and deliver software solutions to clients around the world and software companies it’s spun out.
“We’ve 10x-ed everything we’ve touched in real estate so far,” Olguin told Crunchbase News. “Plus, we’re providing the kind of exciting technology environment that people expect in the industry.”
Looking ahead, Bitwise is aiming to double in size year-over-year in terms of employees, as well as expand to two to three more cities in the same number of years. With that, the company expects to expand its real estate footprint as well.
Another important piece of this story is Olguin’s background.
Raising the cash to fuel the vision was a hurdle. Olguin described raising money as “a little bit like visiting a foreign country and not speaking the language” considering she and her co-founder “were not well-networked in the Bay Area and other first-tier cities.” The process took much longer than they expected.
“We have been building a company in the desert,” she said. “And it’s been a lot of work to introduce ourselves to the world. But we found partners that are the right fit for us.”
Plus, Olguin is excited because she believes her company’s funding is “big news for women in technology and people of color in technology.”
“We also think it’s really important that somebody comes up behind us and eclipses this in short order,” she said. “We expect it will be a series of events that will help get women or other people of color to be taken seriously both in the venture world and technology industry at large… This country is filled with stories similar to mine – people from underserved communities, who never thought these kinds of opportunities would be accessible to them.”
This aligns with the company’s mission to help people from “marginalized” places have access to the skills they need to enter the technology sector. Olguin, who is the daughter of farm laborers, also said she wants her story to inspire other LatinX founders.
In a press release, Richelieu Dennis, founder of the New Voices Fund, said that “sourcing talent from traditionally overlooked and undervalued pools is one of the most effective strategies for companies to remain competitive.”
“We’ve chosen to invest in Bitwise as one of the only private entities approaching the realities of the economy, technology and marginalized communities with a successful, repeatable business model that supports all three areas,” Dennis added.
Over time, Bitwise said it has produced more than 1,000 new software developers, attracted over 200 technology companies to its facilities, contributed to the creation of thousands of jobs in the region, “and turned 250,000 sq. ft of previously blighted downtown buildings into desirable commercial real estate.”
Also in the press release, Kapor Capital Co-founder and Partner Mitch Kapor said his firm was impressed with Bitwise’s approach of weaving together training and education with software development and commercial activity in a common physical space “while also successfully addressing the growing skills gap in the tech industry.”
“Our investment in Bitwise is based on our shared belief that genius can be found anywhere, but until opportunity has the same reach, we need companies like Bitwise that will take action to close that gap,” he said.
The lead investors are joined by Motley Fool Ventures, Lumina Foundation, Libra Foundation and Pi Investments Innovation (both investments facilitated by Candide Group), Acumen America, Plum Alley, Aera VC, GingerBread Capital, Arlan Hamilton’s joint venture with Mark Cuban, Kat Taylor, Morgan Simon and Reach Capital, among others.