The fintech world witnessed some surprising developments last week as Bolt, a one-click checkout startup, leaked a term sheet revealing its attempt to raise $200 million in equity along with an additional $250 million in marketing credits. This move aimed to achieve a $14 billion valuation with an aggressive pay-to-play approach that would require existing investors to invest more money or risk losing their stakes to a buyout at only 1 cent per share.
In response, the industry expressed skepticism towards Bolt’s ambitious plans.
Brad Pamnani, leading the proposed $200 million equity investment, indicated that shareholders had a deadline until the end of the following week to decide on participating in the funding round.
Initially reported by The Information on August 20, Bolt’s rumored $450 million raise at a $14 billion valuation raised eyebrows due to the company’s previous controversies, including the departure of founder Ryan Breslow in 2022 amidst allegations of misleading investors.
Despite initial reports linking Silverbear Capital to the investment, Pamnani clarified that a new UAE-based private equity fund would manage the investment, not Silverbear Capital.
Ashesh Shah from The London Fund revealed plans to invest at least $250 million in Bolt through marketing credits rather than cash, leveraging partnerships with influencers in the media world.
New investors agree to put Breslow back in charge
Bolt’s financials revealed a $28 million revenue and $7 million gross profit as of March, signaling a significant valuation jump from its previous $11 billion valuation in January 2022.
Pamnani expressed hopes for a more conservative valuation around $9-10 billion but conceded to the $14 billion figure.
In a surprising turn, the term sheet called for Breslow’s reinstatement as CEO, offering him a substantial bonus and back pay for resuming his role.
Bolt’s operations were fulfilling under interim CEO Justin Grooms, following Maju Kuruvilla’s departure amid reported board disputes.
The contentious pay-to-play provision in the deal raised questions about Bolt’s ability to force investors to sell at a low price, with legal experts suggesting investor pushback given the company’s charter requirements.
The situation could escalate into negotiations between investors and Bolt, potentially resulting in a revised agreement with shareholders.
For more updates on the fintech industry, subscribe to TechCrunch Fintech here.
Have a tip to share? Contact Maryann at maryann@techcrunch.com or via Signal at 408.204.3036. Secure communications can be made here.
