Payments unicorn Bolt Financial stunned investors with its plan to raise $450 million at a $14 billion valuation last week. Today, CEO Justin Grooms provided another shocking update. The company is threatening veiled legal action against the investment bank mistakenly named as the round’s main investor: Silverbear Capital, a Seychelles-registered investment bank.
“We believe there was some internal miscommunication at Silverbear Capital, one of our lead investors, which has caused unnecessary confusion. The fact is, they signed a binding term sheet committing $200 million,” Grooms wrote in an email seen by Forbes. “Our exceptional legal team at Gibson, Dunn & Crutcher stands ready to represent the company in seeking to enforce our rights vigorously.”
The update seems likely to cause further confusion for investors already reeling from Bolt’s earlier ultimatum to invest in the $450 million round, which Grooms described as “pay-to-play,” or risk 70% of their equity being wiped out. That threat now seems to be off the table unless Bolt receives the $200 million it expects from Silverbear Capital.
Silverbear Capital founder and managing partner Peter Chun told Forbes last week that he was unaware of the $450 million round, and had never met with Bolt or Breslow. “We have never had a conversation with Bolt,” he said. “We were never in this deal.”
Investor documents viewed by Forbes identified Silverbear and its partner Brad Pamnani as leading the deal, which would see the bank invest $200 million into the one-click checkout provider. But Pamnani wasn’t allowed to make such agreements. “He’s just an ordinary partner so he’s not authorized to sign any paperwork,” Chun told Forbes.
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Silverbear Capital’s partner Veronica Welch said she was unaware of Groom’s email. “That’s horrible. That’s not true. This never had anything to do with any miscommunications this was never discussed or approved in the company,“ Welch told Forbes on August 30.
Pamnani, who is based in New York and claims on his LinkedIn profile to manage a $6.7 billion portfolio, told Forbes he met Breslow last year through a Los Angeles investing club.
Last week, Pamnani told journalist Eric Newcomer that Silverbear was not actually participating in the round. And on a call with Forbes, he attributed the error to a broker who had mistakenly named the investment bank as lead investor. Pamnani said he had accidentally signed a Bolt non-disclosure agreement using his Silverbear email address, creating confusion about who he was representing. The broker, New York-based AMA Investment Group, accepted responsibility for the mishap and told Forbes at the time that it would be uploading corrected documents in the near future. “We bear full responsibility for our error in the documents and are coordinating internally to fix the issues between all parties involved,” AMA added on Friday.
Pamnani told Forbes on Friday he saw no issue in Groom’s email. “There is nothing new there. They are just reiterating the terms and that’s not specifically to Silverbear, that applies to all investors,” says Pamnani, adding that there was a separate legal conversation with broker AMA. “You are talking about a premature, misinterpretation in this case. We are continuing to work directly and amicably with the Bolt team to resolve this, outside of the chaos that brokerage has created for the two parties.”
On Tuesday, following reports by Forbes and others about Silverbear’s involvement, Grooms sent shareholders an email notifying them that it was “having discussions with our lead investors this week and will have a more material update soon about a new timeline and updated materials.”
Pamnani has claimed that he is instead managing an Abu Dhabi-based fund, which is leading the Bolt round. He declined to share any details about the fund, but told Axios that it has not yet received government approval for registration in the UAE.
“With the latest turn of events, we will fight even harder for you. While we cannot change binding terms, if Silverbear Capital or their associates do not close the lion’s share of their commitment, Bolt will not enforce the term sheet’s pro rata clause,” Grooms wrote, claiming the company had forced an unnamed investor who tried to back out of a prior round to remain “accountable” for their pledge. Bolt did not immediately respond to a request for comment.
Grooms also walked back some of the terms of Bolt’s Series F. Investors had been handed conflicting deadlines to commit to the round. That’s now been extended to 40 days following the round’s first close on September 13, and the size of the pro-rata pool has been slashed by a fifth to $20 million.
Grooms also doubled down on raising $250 million in “marketing credits” from The London Fund, a venture capital firm about which little is known. “The hearsay about The London Fund doesn’t match our reality. We have undergone meaningful diligence of the fund and aren’t deterred by recent noise,” said Grooms. He added that Bolt founder and chairman Ryan Breslow had worked with them for his side project, wellness marketplace Love.com, which The London Fund has invested in.
Perhaps more troubling for Bolt investors is the updated financials they were also given. They reveal that Bolt’s losses had grown to $302 million in 2023 on revenues of just $27 million. The 2023 numbers are particularly bad because of a $54 million goodwill impairment but revenues had also shrank from $30 million in 2022. That’s despite Bolt axing the majority of its staff in several rounds of layoffs over last year.
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