April is turning out to be a newsworthy month for digital wallet provider Bolt Financial. Not only did it announce a $1.5bn crypto acquisition, but its founder’s Silicon Valley insults are also coming back to bite, and Authentic Brands Group is now suing the company.
ABG Strikes a Blow
Authentic Brands Group is considered Bolt’s most prominent customer, and therefore this news could prove particularly damaging.
ABG’s complaint alleges Bolt Financial caused Forever 21 to lose out on over $150m in online sales when it integrated with the digital wallet provider.
The complaint also states that Bolt raised funding at increasingly high valuations by “consistently overstating” the nature of its integration with ABG’s brands, thereby suggesting to investors that it had more customers than it did.
In Bolt’s response to the complaint, it says Authentic Brand Group’s claims are without merit and are “a transparent attempt” to renegotiate the terms of the companies’ agreements.
Meanwhile, in the lawsuit, Authentic Brands states its agreement with Bolt Financial gives it the right to buy up to 5% of Bolt for $29m. While Bolt says, it’s not obligated to sell.
Bolt’s Chief Executive Officer Maju Kuruvilla stated:
We love all of our customers and we are thankful for the wonderful partnership with Forever21 and Lucky. It’s clear that Authentic Brands Group has confidence in Bolt's future as they are fighting to own a meaningful percentage of our business.
The complaint is dated March 4 and is only now coming to light. The case is set to go to court by October.
Bolt’s Crypto Acquisition Challenges Shopify and Amazon
Earlier this month, Bolt Financial announced its acquisition of crypto start-up Wyre for $1.5bn. This platform will allow Bolt to add crypto and web3 capabilities to its digital wallet.
The move is Bolt’s biggest acquisition to date and was tipped to pose a threat to major industry players Shopify (NYSE: SHOP) and Amazon (NASDAQ: AMZN).
But the shine quickly wore off.
Ryan Breslow Insults Silicon Valley
Bolt Financial’s founder Ryan Breslow made waves in January when he called out venture capital firms Sequoia and Y Combinator and payments company Stripe for allegedly conspiring to sink his company.
He tweeted a thread outlining the challenges he faced running a start-up looking for Silicon Valley funding, directly calling Stripe and YCombinator, the Mob Bosses of Silicon Valley.
Stripe and YCombinator, the Mob Bosses of Silicon Valley, a thread:
— Ryan Breslow (@theryanking) January 25, 2022
Breslow resigned as CEO a few days later to become Executive Chairman instead.
Don’t Bite the Hand that Feeds You
Earlier this year, Bolt attempted to raise cash at a $14bn valuation. But rumor has it that the founder’s outburst has taken the shine off the company.
In less than three months, the company's value has plummeted. One investor Is selling a large stake at a company valuation of $8bn, while buyers are looking to buy at a maximum $6bn valuation, according to the New York Post report.
When Will Bolt Financial IPO?
Bolt Financial is currently a private company. While rumors of a Bolt IPO have circulated, nothing has ever been set in motion.
However, the company has attracted significant investment privately from venture capital funds, including Peter Thiel’s Founders Fund, Great Oaks Venture Capital, Navitas Capital, Black Rock, etc.
What is Bolt?
Bolt is a checkout experience platform designed to give retailers the freedom to focus on their brand while Bolt perfects the purchase. People have more options than ever when shopping online, and retailers need to provide the customers will move on.
From the first moment a retailer joins the Bolt Network, it offers shoppers a one-click checkout with no passwords, forms, or payment details even if they haven’t visited the site before.
Bolt claims to solve the complicated technological challenges involved in the checkout, including fraud detection and managing digital wallets. This allows retailers to devote their energy to growing their product, brand, and customer base.
With millions of shoppers and top brands in the Bolt network, it aims to create a one-click checkout for the rest of the internet.
Bolt was established in 2014 and is headquartered in San Francisco, California.
What is Authentic Brands Group?
Authentic Brands Group owns the rights to some of the world’s most iconic celebrities and brands. David Beckham, Shaquille O’Neal, Mohammed Ali, and Marilyn Monroe feature in ABG’s impressive portfolio.
The company also owns and licenses merchandise for many of America’s most recognized apparel, entertainment, and athletics brands, including Forever 21, Juicy Couture, JC Penney, Nine West and Brooks Brothers.
An Authentic Brands IPO was on the cards last year, but the company later canceled its plans. ABG’s initial S-1 filing with the United States Securities and Exchange Commission (SEC) looked to raise $100m at IPO.