Payments startup Bolt sued by major customer

Bolt co-founder Ryan Breslow

Lizette Chapman

April 27 2022 02:30 AM

Bolt Financial, the payments startup known for its founder's inflammatory Twitter threads claiming Silicon Valley is run by "mob bosses," is being sued by its most prominent customer.

The complaint by Authentic Brands Group (ABG) alleges that Bolt not only failed to deliver promised technology but that during Bolt's integration with Forever 21, the clothier lost out on more than $150m (€141m) in online sales.

The complaint also states that Bolt raised funding at increasingly high valuations by "consistently overstating" the nature of its integration with ABG's brands to suggest it had more customers than it did and to convince investors to bankroll additional growth for the startup.

Because Bolt's business relies on having a large network of consumers, the allegations create major new uncertainty for the controversial payments startup, which investors most recently valued at $11bn.

In a filing, Bolt responded to the complaint saying that ABG's claims are without merit, and are "a transparent attempt" to renegotiate the terms of the companies' agreements. A spokeswoman for Bolt declined to comment.

A representative for ABG did not immediately provide a comment.
The complaint is dated March 4 and has not been previously reported. The case is set to go to court by October.

In the suit, ABG also says its agreement with the startup entitles the company to buy up to 5pc of Bolt for $29m. Bolt's filing said it is not obligated to sell. At Bolt's current valuation, that stake would be worth about $500mn.

The lawsuit comes during a chaotic time for Bolt. Soon after the company raised its last round of funding in January, its 27-year-old co-founder, Ryan Breslow, tweeted a series of incendiary accusations against several Silicon Valley luminaries, claiming that the industry was a "boys club" run by "mob bosses".

Weeks later, Mr Breslow resigned, in a move he said was unrelated to his tweets, and took on a new role as chairman of the company.

Earlier this year Bolt was said to seek new funding at a $14bn valuation, but the financing has yet to materialise.

A spokeswoman said Bolt was in talks to raise new funding, but declined to comment on the valuation.

Bolt's revenue of around $40m is unusually low for a company with such a high pricetag, even in the money-drenched world of tech startups. This month the company made another dramatic move: Bolt said it had reached an agreement to acquire crypto startup Wyre Payments.

The lawsuit by ABG generates new questions around Bolt, whose growth is predicated on signing up new customers by making online checkout easy for companies and consumers.

Like its competitors, including Shopify's Shop Pay and Peach Pay, Bolt streamlines the process for purchasing items online.

The startup allows customers to buy an item with one click and from any page (not just the cart page), and makes money when a purchase is completed.