WVV Capital’s Investment in Raeden

New York

This article was written by Jason Franklin, Ph.D., CEO and Founding Managing Director of WVV Capital, and was originally published to WVV’s Medium.

Virtual meetings. Streaming services. Remote learning. IP-based telecom. Virtual reality. Artificial Intelligence. Online gaming. Autonomous Vehicles. Virtual surgery.

What do all of these things have in common? They require low-latency access to scaled, last-mile compute resources.

Fueled by these new and growing application services, the demand for cloud services for a wide range of use cases is only continuing to grow. One way to meet this demand is through “edge” data centers. Edge data centers, a crucial part of edge computing, are data centers that are located close to end users and devices — enabling faster performance and lower latency by removing the need to send data back and forth to centralized hyper-scale data centers located further away. IDC predicts that by 2023, over 50% of new enterprise IT infrastructure deployed will be at the edge rather than corporate data centers, and LF Edge reports that by 2028, cumulative capital expenditures of up to $800 billion will be spent on new and replacement IT server equipment and edge computing facilities. One of WVV Capital’s (WVV’s) portfolio companies, Raeden, is ideally positioned to accelerate the adoption and availability of edge compute resources for high-bandwidth applications.

Raeden enables the retrofitting of unused commercial real estate to host edge data centers through a virtual marketplace, where they match ‘digital tenants’ to support their data infrastructure needs through end-user proximity. The brilliant thing about Raeden is the company started just before the COVID-19 pandemic, which undoubtedly and unequivocally accelerated the transition to remote work — and in turn, rendered a large amount of office space empty. According to a recent New York Times article, office vacancy rates across the U.S. are 19.1 percent, totaling 185 million square feet, or 3.85 percent of total office space in the country. Not only does Raeden help technology companies provide better performance to their customers through higher reliability and lower latency, it also opens up a new source of net operating income (NOI) for real estate owners.

But wait, there’s more! In the process, Raeden is also helping to improve sustainability in the built environment. Building operations, such as HVAC, account for 27% of annual global CO2 emissions. When retrofitting unused real estate into data centers, Raeden is also improving their carbon footprint by updating their HVAC systems to more energy-efficient technologies, such as heat pumps or newer, more energy-efficient units. Raeden’s highly-scaled model is also ideally positioned to support renewable energy initiatives such as distributed battery storage and microgrids. Bottom line? Not only is Raeden improving ROI for building owners, but they’re also helping them meet their climate goals.

In the interview below, Raeden Co-Founder and CEO Kari Schrader shares a bit more insight into how Raeden is helping to power the ‘last mile’ in connectivity.

Kari, could you please introduce yourself and tell us more about Raeden? What problem are you and the Raeden team looking to solve?

My name is Kari Schrader, and I am the CEO and Co-Founder of Raeden. After getting my MBA at the Stanford Graduate School of Business, I worked in institutional real estate investment for several years, and noticed a market need that didn’t have an elegant solution: businesses looking to extend their digital infrastructure to the “last mile.” This process was very manual and time intensive, particularly when these companies were looking to deploy outside of traditional data center and telecom facilities — I knew there had to be a better way.

With the goal of solving this problem in mind, I started Raeden in 2019 with my Co-Founders Jason Green (COO and Head of Infrastructure) and Lorin Dorco (Head of Network Architecture). Raeden enables fast, scalable deployments of digital infrastructure through partnerships with real estate owners. Our combined backgrounds in data centers, telecommunications, and real estate make us the ‘dream team’ to bring a company like Raeden to life.

What would you say is unique about what Raeden is doing?

I would say there are two things we do that make us unique.

The first would be our approach to how we connect businesses looking to extend their corporate technology infrastructure — who we call ‘digital tenants’ — to available real estate. Raeden is the first company to aggregate information on power, network connectivity, HVAC capacity, building security and other resources from thousands of buildings globally on a single platform: The Raeden Marketplace. The Raeden Marketplace allows anyone who works in corporate technology infrastructure to easily search and filter available real estate locations to extend their infrastructure deployment — allowing them to source, engineer, and deploy closer to their customers.

The second thing we do is partner with real estate owners to transform unused space in their portfolio into digital infrastructure, enabling them to achieve net-new revenues from previously unutilized space and “future proof” their portfolios. For example, we just partnered with Bedrock, Detroit’s largest real-estate developer, to bring the first independent carrier hotel to Downtown Detroit. This new facility will not only allow Bedrock to provide its more than 100 properties throughout the city with access to faster and more resilient technology services, it will also power expanded internet access throughout Detroit. Over time, we expect to activate several more of Bedrock’s data centers and interconnect them with Bedrock’s traditional real estate portfolio, creating the United States’ first real “smart city.” These integrated initiatives require expertise across all aspects of digital infrastructure — real estate, data centers, and network — and only Raeden, in my opinion, has the combined experience to bring these complex projects to life.

What made you decide to take an investment in WVV?

A lot of the value we see from working with WVV is the potential to collaborate with its corporate partners. As a global leader in HVAC and security systems, the synergies with Johnson Controls are perhaps most obvious. And with their focus on sustainability, Johnson Controls also has the expertise to assist with our mission in a responsible manner.

The opportunity to collaborate with Foxconn makes sense on many levels. Not only do they develop cloud and networking products, but they are also innovating in next-generation technologies such as electric vehicles, artificial intelligence, robotics, and more — all of which can benefit from the edge data centers we are helping to build.

Advocate Health, while not as obvious, may at some point rely on immersive virtual reality to take their telehealth visits to the next level — and who knows where the future may take us; perhaps someday surgeons can operate remotely using robotics.

Last but certainly not least, WVV’s in-house operating team has been an invaluable source of support and advice. They’ve quickly become one of our most trusted investors and I feel incredibly lucky to have them on our side.

What’s next for Raeden?

2023 is going to be Raeden’s “coming out” year. We currently have 6,000+ locations on our Marketplace and expect to exceed 10,000 locations by the end of 2023. We are supporting a large number of revolutionary digital tenancy deployments for a diverse array of customers, including carriers, CDNs, and Fortune 500 companies.

By 2024, my goal is for “Raeden” to be the first thought when anyone thinks of “last-mile technology infrastructure.” We will be the easy button for all edge deployments, from 5G to bare metal to high-density compute, and everything in between.

About WVV Capital

Founded in 2019, WV Ventures (WVV) is an early-stage venture capital firm comprised of four corporate partners in healthcare (Advocate Aurora Health), manufacturing (Foxconn), building technology (Johnson Controls), and financial services and insurance (Northwestern Mutual). We invest our $100 million fund in startups building transformative and interdisciplinary innovations across these industries, as well as those with deeply-embedded AI.