As Bitwise started its ascent to making Fresno a tech innovation hub, it had a great champion in then-mayor Ashley Swearengin.

And, the company picked up a $1 million American Rescue Plan Act grant from City Hall under Mayor Jerry Dyer in late 2022.

Today, both leaders are hoping that a reeling Bitwise keeps its financial ship afloat.

Quoted in 2016, Swearengin — Fresno’s mayor from 2009-2017 — told The Fresno Bee that she was excited “and we want to run alongside them as fast as they can go.”

Seven years later, Bitwise Industries faces a financial fiasco. It is late on its property taxes, it furloughed hundreds of employees, and there are reports its most recent paychecks are no good.

“(I’m) just really struck by what a hard moment this is for Bitwise and for their team, all of their employees, and their board. And so first and foremost, my heart is with them. And I can’t imagine how stressful this is,” Swearengin said.

Today, Swearengin is the president and CEO of the nonprofit Central Valley Community Foundation.

“My hope is that there is a path forward for Bitwise in some form or fashion. And I think we just have to wait and see and hope the best for them while they’re trying to find their footing,” she said.

“The final chapter hasn’t been written yet about Bitwise. I’m just really hoping that they get on their feet because I think their intentions have been really positive.”

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Dyer Administration In Talks with Bitwise

Dyer issued a statement about the Bitwise situation on Tuesday afternoon. GV Wire first reported the company’s financial difficulties last week. Then, on Monday, Bitwise sent an email to all employees stating that they were being furloughed and their most recent paychecks would likely bounce.

“Like many in Fresno, we were surprised and saddened to hear about the financial difficulties that led Bitwise to issue furloughs to all its employees,” Dyer said. “It is our hope that Bitwise will be able to navigate successfully through these uncertain and difficult financial times.”

Dyer said that the city contracted with Bitwise in October 2022 for a program that taught small, minority-owned businesses to attract more customers via the internet.

The $1 million “grant for small business digital empowerment was funded using American Rescue Plan Act money. To date, the City has paid Bitwise half of the grant amount ($500,000),” Dyer said. “We are currently in communication with Bitwise to determine if the program will continue and whether any funding will need to be returned.”

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CVCF Invested in Bitwise Subsidiary

CVCF invested $500,000 ($50,000 itself and the remainder from grant partners) into an associated Bitwise Industries company, Bitwise Capital.

Bitwise Capital, its website says, “was created to provide pre-seed funding to underestimated founders that come from non-traditional backgrounds in unexpected areas who are normally excluded from the technology industry.”

Swearengin said CVCF performed “a ton of due diligence on the venture fund itself.”

“It’s a risky proposition. So, it’s a small part of our investment strategy, but it’s one that we wanted to be a part of because we understand that in the long run, the path forward for our region’s economy is to start and grow higher-quality jobs here,” Swearengin said.

“It was an easy decision.”

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No Comment from Bitwise, Investors

Bitwise has been quiet about its financial tumult. Neither co-CEO Jake Soberal nor Irma Olguin Jr. returned GV Wire’s request for comment on Tuesday.

Beth Mily, the company’s president, referred any comment to Soberal or Olguin. Other executives also declined to comment.

Several Bitwise investors, including Kapor Capital, either declined to comment or did not respond.

Allegations of Problems With 401 (k) Accounts Surface

There are new accusations that Bitwise failed to deposit money taken out of paychecks for 401 (k) retirement accounts since at least March 17. One GV Wire source estimated that $1 million has failed to be deposited into the employee 401 (k) funds.

There are also questions about whether Bitwise complied with state law requiring an advanced notice to employees of pending layoffs. The Worker Adjustment and Retraining Notification (WARN) requires 60-day advance notice to employees and local officials.