The saga of Bolt, the payments startup once hailed as a unicorn, took a dramatic turn in August 2023 when its founder, Ryan Breslow, announced his return as CEO coupled with a controversial $450 million fundraising round. This move, initially met with surprise, quickly devolved into outrage among prominent investors like BlackRock and Hedosophia, who realized the proposed deal’s structure effectively diluted their holdings unless they participated in the new round. This dilutive mechanism amounted to a near-total wipeout of existing shares for those declining to invest further, prompting lawsuits aimed at blocking the contentious raise. The legal battle underscored the deep divisions between Breslow and his investors, leaving the future of Bolt and its valuation hanging in the balance.
Adding another layer of complexity to the unfolding drama was a separate legal dispute between Bolt and Activant Capital, another investor that had led the startup’s Series C round in 2019. Activant had sued Breslow in July 2023, accusing him of misusing company funds to repay a personal loan for which he had pledged his Bolt shares as collateral. Rather than allowing the shares to be forfeited, Breslow used Bolt’s cash reserves to settle the debt, subsequently removing Activant’s founder, Steve Sarracino, and other dissenting board members. Breslow defended his actions, claiming the right to remove directors and dismissing Activant’s lawsuit as “sour grapes.” This legal entanglement further complicated the already tumultuous situation at Bolt, raising questions about Breslow’s leadership and financial dealings.
Amidst the legal and financial turmoil, a glimmer of resolution emerged for Activant Capital. In December 2023, the Delaware Court of Chancery ruled in favor of Activant, permitting the venture fund to sell its shares back to Bolt for $37 million. This decision concluded Activant’s lawsuit against Breslow and allowed them to exit their investment, albeit under contentious circumstances. The court acknowledged the complex and problematic series of events leading to the settlement, emphasizing that neither party emerged with a “gold star.” This partial resolution, however, did little to address the larger issues surrounding Bolt’s proposed fundraising and the ongoing dispute with its major investors.
The Activant settlement offered a glimpse into Bolt’s financial state, suggesting a more stable position than previously perceived. Despite reported losses of $310 million against a mere $27 million in revenue in 2023, the court noted an improvement in the company’s cash flow, based on confidential information revealed during the proceedings. This revelation, although obscured by non-disclosure, hinted at a potential path forward for Bolt, even as it remained embroiled in legal battles and faced uncertainty about its leadership and future direction.
The backstory of Bolt’s meteoric rise and subsequent fall further illuminates the dramatic events of 2023. Breslow, a young and ambitious entrepreneur, had successfully secured significant investments, boosting Bolt’s valuation to over $11 billion by early 2022. This success propelled him to billionaire status, but his tenure was marked by controversy, including a public feud with industry giants, lawsuits from customers, and allegations of inflated metrics. His abrupt resignation followed by a dramatic return with an unconventional fundraising plan added further fuel to the fire, raising serious concerns among investors about the company’s trajectory.
The proposed $450 million fundraising round, the catalyst for the ongoing disputes, presented highly unusual terms that sparked alarm among investors. The deal not only reinstated Breslow as CEO with a substantial compensation package but also intertwined Bolt with his other venture, Love, a health marketplace. The tight deadline for investors to commit, coupled with the threat of significant share dilution, created further suspicion. Reports of an obscure lead investor and the inclusion of “marketing credits” as part of the funding raised serious doubts about the legitimacy and viability of the proposed deal. This unconventional approach fueled investor distrust, leading to the ongoing legal stalemate. The future of Bolt remains uncertain, entangled in a web of legal disputes, leadership challenges, and a precarious financial situation. The resolution of these issues will determine whether the once-promising fintech startup can recover from its tumultuous past and regain the confidence of its investors.