Last week was very exciting in the fintech world as Bolt surprised everyone by revealing a leaked document about trying to raise $200 million in stocks and an additional $250 million for marketing. The industry was shocked by Bolt’s plan of a $14 billion evaluation through a forced funding scheme. Investors have until next week to decide whether to invest.
On August 20th, Bolt was rumored to be close to raising $450 million at a $14 billion valuation. This news raised eyebrows due to the controversies surrounding the company, including the departure of its founder Ryan Breslow as CEO in 2022, who is now returning. Several details of the funding deal were not straightforward, leading to confusion.
The proposed investment led by Silverbear Capital turned out to be managed by a new UAE-based private equity fund, which Silverbear Capital is not part of. There has been some confusion regarding the involvement of Silverbear Capital in the deal, but it was clarified that they are not involved.
Breslow declined to comment on the deal. Another investor, Ashesh Shah, plans to invest at least $250 million in Bolt through marketing credits instead of cash. A pay-to-play scheme in the deal requires existing shareholders to buy additional shares at higher rates or risk having their shares bought back for a penny each.
Venture capital law expert Andre Gharakhanian analyzed the deal and suggested that forcing investors to sell their shares for a penny might not be legally feasible. He explained the nuances of the pay-to-play structure and how Bolt’s buyback provision differs from traditional forced conversions.
The deal with Bolt has caused a stir in the venture capital world, with many investors seeking legal advice to navigate the complexities of the proposed arrangement. The company’s strategy to pressure non-participating investors to support the deal could lead to eventual consent, but the overall outcome remains uncertain. Time will tell how this situation unfolds in the fintech industry.
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