Investors in Bolt Financial, a checkout technology firm, are facing confusion and skepticism over a new $200 million funding round that could see the return of controversial founder Ryan Breslow as CEO. The proposal, which investors must respond to by the end of next week, has raised eyebrows due to the need for more transparency about the lead investor's identity and the unconventional terms attached to the deal.
The funding round would value Bolt at $14 billion, which it failed to secure in previous attempts after raising nearly $1 billion from venture capitalists despite limited revenue. The proposal has several conditions that have unsettled investors, including a pay-to-play provision that could dilute existing shareholders' stakes and $250 million in influencer marketing credits from a mysterious entity called The London Fund.
The deal is also generous to Breslow, offering him a $2 million bonus for returning as CEO, $1 million in backpay, additional stock options, a travel stipend, and an indemnification agreement—a critical point given ongoing legal disputes over an unpaid company loan. Moreover, Bolt would invest in another Breslow venture called Love and in The London Fund, where Breslow would join the board, suggesting that he is attempting to create a conglomerate of his businesses.
Investor concerns have been amplified by the lack of clarity surrounding the deal's financiers. The letter to investors was signed by Brad Pamnani, who initially appeared to be representing investment bank Silverbear Capital. However, Pamnani later clarified that Silverbear is not involved. Instead, he claimed to represent a Cayman Islands-based private equity firm, a limited partner in a particular purpose vehicle (SPV) created to raise the $200 million. This SPV is reportedly managed by a new UAE-based private equity fund that has not yet received government approval for registration, adding another layer of uncertainty.
Pamnani refused to disclose further details about the UAE fund's team or the investors behind it, citing no obligation to do so until the deal's closure. This secrecy has left investors wary, with some questioning the legitimacy of the new funds. Despite these concerns, Bolt, which reportedly has substantial cash reserves, plans to use the investment to develop a super-app and expand internationally.
The company's 2024 revenue is expected to reach just $28 million, making the $14 billion valuation seem excessively optimistic, akin to the inflated valuations seen with companies like Truth Social. Bolt requires 51% shareholder approval to move forward with the deal, with existing preferred shareholders needing to commit at least $20 million to avoid significant dilution. As a result, some investors are seeking legal counsel to better understand the proposal's implications.
While PayPal's recent launch of a similar product may have validated Bolt's business model, the execution of this latest financing strategy has left investors uncertain and skeptical.