Business

Ryan Breslow’s Lead Investor Blindsided By $450 Million Bolt Fundraise

August 23, 2024

The former billionaire stunned investors with a plan to raise $450 million for his payments startup at a $14 billion valuation. But the head of the primary investment firm named in the financial documents, Silverbear Capital, claims to never have spoken with Breslow or Bolt.

_By_{Iain Martin}_and_{Sarah Emerson}_{, Forbes Staff}

Investors know to expect surprises from Bolt founder Ryan Breslow by now. Once it was the staggering $11 billion valuation of his “one-click” payments startup Bolt — a deal that minted him as one of the youngest billionaires ever, at 27. Then it was the allegations of fraud, massive layoffs, towering expenses, and multiple legal battles with clients and investors.

But nothing had prepared investors for Breslow’s latest gambit, which could reinstate him as the CEO of the San Francisco-based Bolt. In an email sent to shareholders on Monday and obtained by Forbes, Bolt’s interim CEO Justin Grooms announced: “We are finalizing a $450+ million Series F funding round from U.A.E- and U.K-based investment firms, which will elevate our total valuation to over $14 billion, a considerable leap from our $11 billion valuation during the Series E1 round in 2022.”

It’s a shocking price tag for a business that made less than $30 million of revenue last year and had offered to buy back shares at just a $300 million valuation months earlier. Bolt investors told Forbes they were enraged by byzantine terms that would enrich Breslow, as well as an apparent 48-hour ultimatum to invest in the company or see 70% of their shares effectively wiped out.

But stranger still is that one of the lead backers cited in official documents told Forbes that they had no knowledge of the deal and wholly refuted their involvement.

“We have never had a conversation with Bolt,” said Peter Chun, founder and managing partner of Seychelles-based investment bank Silverbear Capital. Investor materials viewed by Forbes identified Silverbear and partner Brad Pamnani as steering the deal, which would see the bank invest $200 million into the payments startup. “We were never in this deal.”

In fact, Chun claims to have only found out about the deal when it was first reported by The Information and tech journalist Eric Newcomer. According to Pamnani’s initial comments to Newcomer, the $200 million investment was actually coming from a $1.2 billion Abu Dhabi-based fund that he manages but declined to identify. Silverbear had been mistakenly named in the deal, Pamnani claimed to Forbes, because he had used his Silverbear email address to sign a Bolt non-disclosure agreement. On a call with Forbes, he initially blamed Bolt for the error and clarified that his UAE fund will begin with a $50 million tranche, with plans to invest up to $150 million more after certain milestones are met.

“The Bolt guys end up putting Silverbear throughout the whole document,” claimed Pamnani, who said he met Breslow at a dinner last year hosted by a Los Angeles-based investment club. “It’s just a whole mess and these guys have stupidly put wrong, inaccurate information out there.” (After publication, Pamnani clarified that he did not blame Bolt for mistakenly naming Silverbear in the deal.)

This is just one of the deal’s components that has shifted since it was originally communicated to investors this week, instigating a scramble as they struggled to understand how the terms would impact them.

For Breslow to return to Bolt as CEO, a majority of preferred shareholders will have to agree to invest in the round, and the financial documents detailing the deal say they have a month to decide. But according to Grooms’ letter to shareholders, they only had until Wednesday to make a call, or see the $1 billion they had collectively poured into the company effectively wiped out, leading to a full-on mad dash among investors. Now, several shareholders told Forbes that they’re boycotting the round entirely and considering legal action against Bolt.

Bolt did not respond to a comment request. Forbes called Breslow, who responded by text: “Unfortunately, I cannot opine until our first closing.”

In addition to the unnamed Abu Dhabi fund that Pamnani claims to represent, Bolt documents list investment firm The London Fund as the round’s other lead investor. But this is hardly a traditional check: Instead of cash, the fund pledged $250 million in “marketing capital and dollar credits” from a little-known creators’ platform called Influence, run by The London Fund’s CEO Ashesh Shah.

“We look for Ferraris with flat tires.”

According to Shah, the platform has a roster of several hundred influencers with 500,000 followers each whom he claims can help deliver on Breslow’s plan to turn Bolt into a WeChat-style super app. “If you think about it, they [influencers] are hashtag investors,” Shah said. “Bolt spent $80 million of hard cash on marketing but our theory is that we can actually create more direct promotions and stuff.” (Influence and the London Fund appear to be set up as a companies in London, but haven’t been registered with the U.K. securities regulator.)

Shah told Forbes that he was interested in Bolt because of Breslow’s broader “ecosystem” — the entrepreneur’s portfolio of companies also include the wellness marketplace Love, crypto payments platform Eco, lending platform Prism and a slew of startups Breslow has funded through his VC firm Family. “We look for Ferraris with flat tires,” Shah said.

The two met after both investing in Dollar Donation Club, a charitable giving platform. Six months ago, the London Fund invested an undisclosed amount in Love, Shah said.

“Is there a conflict of interest? It’s a complex multi-party transaction.”

Shah didn’t have much sympathy for investors, who now faced the $1 billion invested with Bolt being wiped out. “We make these investors sound like victims,” says Shah. “The day you tell me that Blackrock is an impoverished fund that should be protected like a granny being taken advantage of, then I think we have a different article.”

The new deal also proposes that Bolt invest up to $6 million in Love, and $10 million into the London Fund, with Breslow to take a seat on the board of the London Fund (previous reports say that Breslow is already on the board; Shah denied that Breslow is currently a director there). The terms additionally stipulate that 20% of the profit from every transaction run through Bolt’s payments platform will be donated to foundations operated by Love and Bolt, or to a nonprofit of Bolt’s choosing. Shah told Forbes that the transaction proceeds could also be funneled to Dollar Donation Club. Love already claims to donate a portion of its revenue to charitable causes through its nonprofit, Time For Love Foundation. Forbes was unable to find any tax filings that confirm its 501(c)(3) status.

To Bolt’s investors, these entanglements are a Gordian knot of conflicts of interests. “It seems like some weird corporate takeover by Ryan and Ashesh,” one Bolt investor said.

“Is there a conflict of interest? It’s a complex multi-party transaction,” said Shah, characterizing it as a “zero conflict” arrangement because his and Breslow’s common interests in Love and Dollar Donation Club predate the Bolt deal.

Like Breslow, Shah has also faced litigation from business partners. Shah’s last major exit as an investor seems to be the sale of Boston-based counterfeit prevention startup Solo Science to Nasdaq-listed cannabis company Akerna in 2020. Solo Science accused him of engaging in “improper communications” with its customers, and having “entered into an improper contract with a contractual counterparty with whom the defendants had a conflict of interest.” Shah contested the case but settled in July 2022.

“We don’t believe in just the business plan, we have to believe in the businessman.”

If the deal goes through, Breslow will receive a $2 million closing bonus, a 33% lifetime net revenue share from deals he refers to Bolt, indemnity from shareholder legal action, reimbursement for several years of legal and other Bolt-related expenses up to $750,000 and an $80,000 monthly tab for travel and security fees. As Forbes previously reported, Breslow had earlier sought to expense seven-figure travel and security bills to Bolt, which the company’s former board members rejected.

When asked about the generous terms, Pamnani claimed they are fair. He said the travel stipend is justified because winning international deals will involve meeting investors across the globe. “We don’t believe in just the business plan, we have to believe in the businessman,” said Pamnani, who argued that the sweeteners were needed to help convince Breslow to return as CEO. Shah also claimed that Breslow was being appropriately rewarded. When asked if Bolt’s board signed off on the terms, he said: “They have to have their approvals, right?”

Breslow stepped down as Bolt’s CEO in January 2022 shortly after landing a $355 million raise at a $11 billion valuation. Around that time, Bolt had become the target of a Securities and Exchange Commission probe that sought to investigate whether Breslow and the company had made misrepresentations to investors during the fund raising for the Series E round. The agency ultimately decided not to recommend enforcement action, according to a letter obtained by Forbes.

_{Got a tip for us? Contact reporters Sarah Emerson at [email protected] or 510-473-8820 on Signal, and Iain Martin at [email protected].}

Last July, Bolt investor and former board member Activant Capital sued Breslow in response to a $30 million loan he’d secured against his stock and later defaulted on. In the suit, Breslow was accused of stacking Bolt’s board with his friends. He eventually reached a settlement in May to repay the loan through the cancellation of more than 13 million of his common shares, which Forbes determined would remove his billionaire status. Activant negotiated a buyback of its shares as part of the settlement, worth approximately $36 million, but a group of major Bolt investors including Blackrock is currently objecting to the deal.

For Breslow, a new round at a $14 billion valuation would unlock another massive share award, agreed as a part of a “moonshot grant” deal he’d made with Bolt’s former board. Over the past year, Breslow has cycled a number of his friends through the board, including music producer Larrance Dopson and journalist Esther Wojcicki, only to later drop them as well. It is unclear who is currently on the board.

This story has been updated to clarify the terms of the UAE fund’s investment in Bolt and to reflect Pamnani’s statements about the deal.