The Bolt Saga Continues: A Legal Threat, an Investor Letter & a Cryptic Statement
I've got the company's financial performance, a letter to investors, and a statement from Ashesh Shah at The London Fund. The situation remains farcical.
It is hard to explain to anyone outside of the startup world that we inhabit why they should care about Bolt, a checkout software company that is in the last gasps of relevance.
Maybe they shouldn’t.
But what is happening at Bolt feels like someone is writing an over-the-top startup world parody. If I were not myself receiving text messages from serious Silicon Valley investors and talking to the quirky players in this latest funding saga, I’d find this all hard to believe.
I’ve got a fascinating email that Bolt interim CEO Justin Grooms sent to Bolt’s preferred investors on Friday. (Credit to Forbes for breaking the story.) And then I’ve got a statement from Ashesh Shah, the investor who I interviewed earlier this month who runs the fund that is supposed to invest $250 million in marketing credits into Bolt. I’m sharing both of them in full with Newcomer subscribers below.
In startup world, we care about Bolt for a couple reasons:
It was once a high-flying financial payments startup valued at $11 billion that attracted investments from serious investors like BlackRock, Tribe Capital, WestCap Group, and General Atlantic. This is a company that raised more than $1 billion in real investor dollars.
The company’s former CEO Ryan Breslow (who is trying to return to the CEO job as part of this deal) turned himself into a meme a few years ago by posting wild conspiracy theories about Y Combinator and Sequoia Capital on Twitter.
The Bolt story has become a philosophical exploration of what a startup valuation really means. Bolt was valued at $11 billion. Then the company was worth $270 million in a stock sale earlier this year. And now the company seems to be trying to construct a deal that would value it at $14 billion from obscure investors.
Bolt’s Financials & Some Takeaways from the Letter
A source shared Bolt’s financials with me this week: Bolt lost $200 million on $30 million in revenue in the fiscal year that ended Jan. 31, 2022. Then Bolt lost $310 million on $27 million in revenue in the fiscal year that ended Jan. 31, 2023. As of the end of January 2023, Bolt had $372 million in the bank. At the end of 2023, the company had more than $200 million in cash on hand, sources said. The revenue has remained fairly consistent and the burn has come down since then, a source told me.
Bolt is now insisting in its letter to investors that Silverbear Capital is on the hook to invest $200 million into Bolt. I’d previously reported based on Bolt sources that “the round is meant to be filled out by a consortium of Abu Dhabi-based investors facilitated by a partner at Silverbear Capital.” Now it sounds like the company is putting pressure on Silverbear to find the capital somewhere. Forbes has reported that Silverbear’s founder and managing partner said that his firm was “never in this deal.”
Bolt is now telling investors that “Gibson, Dunn & Crutcher stands ready to represent the company in seeking to enforce our rights vigorously.” (In Bolt’s earlier correspondence, they told investors that Latham & Watkins was working with them on the deal. These are two very well-respected law firms around this pretty bonkers situation.)
It never really seemed believable to me that Bolt was going to raise at a true $14 billion valuation — maybe there would be so many terms and so much funny money that everyone could pretend that’s what it was worth. The majority of the “$450 million” deal was supposed to come in marketing credits from a no-name company called Influence by The London Fund. (Reporting from Dan Primack has raised some further questions about The London Fund.) Meanwhile, it’s never been totally clear if the remaining $200 million in actual cash was supposed to come from Silverbear or unnamed investors in the United Arab Emirates. Even as the Bolt is pressuring Silverbear to make good on what it believes is a commitment to go forward with the deal, Bolt remains open to Silverbear sourcing or arranging funds to meet their commitment, according to a source.
In a statement I received from The London Fund’s Shah, he seems to be underlining just how unfinished this deal is.
I continue to wonder if part of the goal here is to get Bolt’s existing investors and the board to approve the terms of the agreement, regardless of whether the money ever really comes through.
You can read the materials for yourself:
Here’s the email Bolt interim CEO Justin Grooms sent preferred Bolt investors on Friday:
Dear Preferred Stockholders,
We appreciate your patience and support over the past week. We have some meaningful updates on the round.
Binding Agreement with Silverbear Capital
We believe there was some internal miscommunication at Silverbear Capital, one of our lead investors, which has caused unnecessary confusion. The fact is, they signed a binding term sheet committing $200M.