Apr 27, 2022 - Economy & Business

Authentic Brands Group sues Bolt Financial

Illustration of a large knife stabbing a stack of bills.
Illustration: Aïda Amer/Axios

The Silicon Valley mob hasn't come for Ryan Breslow or Bolt Financial. Instead, the attack is coming from New York.

Driving the news: Authentic Brands Group, the retail and brand management juggernaut led by Jamie Salter, has sued Bolt for breach of contract.

  • At issue is the one-stop checkout tech Bolt agreed to build for ABG brands like Forever 21 and Lucky, and a deal whereby ABG could get a 5% equity stake in Bolt were it to hit certain gross transaction volumes.

By the numbers: Bolt most recently was valued at $11 billion by venture capitalists, which would put ABG's piece at $550 million (on just a $29 million cost basis).

  • In the suit, ABG alleges that the software wasn't ready when promised, and that Bolt changed the terms of the $750 million GMV threshold needed to exercise the warrants.
  • Axios has obtained a memo sent from Bolt's general counsel to company employees, which says in part: "We disagree with ABG's assertions, and stand behind the incredible work our teams have put into this relationship. Furthermore, we believe our position is strong, and look forward to prevailing in court as the legal process plays out."
  • The memo adds that ABG continues to work with Bolt, including plans to launch this year with the Nautica brand.

This could be bad for Bolt because the company has regularly touted ABG as one of its flagship customers and tech validators. ABG is now publicly saying the company regularly fails to meet its deadlines, is dishonest and a lousy partner.

  • Plus, if ABG can prove that Bolt missed deadlines, it raises questions about Breslow's evangelism for the four-day workweek.

This could be bad for private equity-backed ABG if it diminishes the equity value of Bolt, via a lawsuit designed to secure equity in Bolt. Maybe that's why ABG originally filed this suit under seal (a judge later disagreed).

  • It also could complicate ABG's future ability to sign deals with tech upstarts, if it's viewed as too litigious.

Neither company agreed to comment on the record about the suit, which can be read below:

Axios Pro reporters Lucinda Shen (Fintech) and Richard Collings (Retail) contributed reporting to this stor.y

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