Bolt Founder and Chairman Ryan Breslow
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Payments unicorn Bolt Financial surprised investors last week with its plan to boost $450 million at a $14 billion valuation. Today, CEO Justin Grooms delivered one other shocking update. The company is threatening veiled legal motion against the investment bank that was falsely named because the lead investor within the round: Silverbear Capital, an investment bank registered within the Seychelles.
“We believe there was an internal misunderstanding at Silverbear Capital, one of our major investors, that caused unnecessary confusion. The fact is that they signed a binding term sheet committing to $200 million,” Grooms wrote in an email obtained by Forbes“Our exceptional legal team at Gibson, Dunn & Crutcher stands ready to represent the company in vigorously enforcing our rights.”
The update is more likely to cause further confusion amongst investors already shocked by Bolt’s earlier ultimatum to take a position within the $450 million round, which Grooms described as “pay-to-play,” or risk having 70% of their equity worn out. That threat now appears to be off the table unless Bolt receives the $200 million it expects from Silverbear Capital.
Peter Chun, founder and managing partner of Silverbear Capital, said Forbes last week that he knew nothing in regards to the $450 million round and had never met with Bolt or Breslow. “We never spoke to Bolt,” he said. “We were never involved in that deal.”
Investor documents viewed by Forbes Silverbear and his partner Brad Pamnani were identified as leading the deal, which might see the bank invest $200 million within the one-click checkout provider. However, Pamnani was not allowed to make such agreements. “He is just an ordinary partner and therefore does not have the authority to sign any papers,” Chun said. Forbes.
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Silverbear Capital partner Veronica Welch said she was unaware of Groom’s email. “This is terrible. This is not true. This never had anything to do with any misunderstanding, this was never discussed or approved within the company,” Welch said. Forbes on August thirtieth.
Pamnani, who lives in New York and Claims on his LinkedIn profile to administer a portfolio of 6.7 billion dollars, Forbes He met Breslow last 12 months through an investment club in Los Angeles.
Last week, Pamnani told journalists Eric Neuling that Silverbear did not likely take part in the round. And when calling with Forbeshe attributed the error to a broker who had incorrectly named the investment bank because the lead investor. Pamnani said he had inadvertently signed a non-disclosure agreement with Bolt using his Silverbear email address, resulting in confusion about who he represented. The broker, New York-based AMA Investment Group, took responsibility for the mishap and said Forbes on the time that it will upload corrected documents within the near future. “We take full responsibility for our error in the documents and are coordinating internally to resolve the issues between all parties involved,” AMA added on Friday.
Pamnani told Forbes on Friday, he saw no problem in Groom’s email. “There is nothing new there. They are just repeating the terms and that does not apply specifically to Silverbear, but to all investors,” Pamnani says, adding that there was a separate legal discussion with broker AMA. “They are talking about a hasty misinterpretation in this case. We continue to work directly and amicably with the Bolt team to resolve this, outside of the chaos the broker has created for the two parties.”
On Tuesday, in accordance with reports from Forbes and others about Silverbear’s involvement, Grooms sent shareholders an email informing them that they were “in discussions with our major investors this week and will have a more detailed update soon with a new timeline and updated materials.”
Pamnani has claimed he as a substitute manages an Abu Dhabi-based fund that’s leading the Bolt round. He declined to offer details in regards to the fund, but told Axios that it has not yet received government approval for registration within the UAE.
“In light of recent developments, we will fight even harder for you. While we cannot change the binding terms, if Silverbear Capital or its partners fail to meet the lion’s share of their commitment, Bolt will not enforce the pro rata clause of the term sheet,” Grooms wrote, claiming the corporate forced an unnamed investor who desired to exit an earlier round to “remain accountable” for his commitment. Bolt didn’t immediately reply to a request for comment.
Grooms also walked back a few of the terms of Bolt’s Series F. Investors had been given conflicting deadlines to take part in the round. That deadline has now been prolonged to 40 days after the round’s initial close on September 13, and the scale of the professional rata pool has been cut by a fifth, to $20 million.
Grooms has also raised $250 million in “marketing loans” from The London Fund, a enterprise capital firm about which little is thought. “The rumors about The London Fund do not reflect our reality. We have thoroughly reviewed the fund and are not deterred by recent rumors,” Grooms said. He added that Bolt founder and chairman Ryan Breslow worked with them on his side project, wellness marketplace Love.com, wherein The London Fund has invested.
Perhaps much more worrying for Bolt investors are the updated financial data additionally they received, which shows that Bolt’s losses have grown to $302 million in 2023, on revenue of just $27 million. The 2023 numbers are particularly bad because there’s a goodwill impairment of $54 million, but revenue can be down from $30 million in 2022. And that is despite Bolt shedding most of its workforce in several rounds of layoffs last 12 months.
