Bolt strikes settlement with Authentic Brands Group
Authentic Brands Group and Bolt Financial on Wednesday said that they've settled the breach of contract lawsuit brought by ABG earlier this year.
Why it matters: The e-commerce market is too challenged right now for strategic partners to be fighting each other, rather than trying to protect their businesses.
Backstory: ABG had hired Bolt to apply its one-stop checkout technology to brands like Lucky and Forever 21, with terms stating that ABG could get a 5% equity stake in Bolt were certain gross transaction volumes reached.
- In its suit, ABG alleged the software was delivered late, and that Bolt improperly changed the terms of the GMV threshold needed to exercise the warrants.
- Bolt was most recently valued by VCs at $11 billion, although it's since changed CEOs and laid off around one-third of its workforce.
What to know: The companies say that ABG does now become a Bolt shareholder, without disclosing specific percentages.
- Bolt CEO Maju Kuruvilla, however, suggested to me last night that the figure falls short of the 5% to which ABG was originally entitled.
- "If we wanted to give what they asked, there wouldn't have been a lawsuit," said Kuruvilla, who took over in late January from controversial founder Ryan Breslow (who's now Bolt's executive chair). "Clearly there was a settlement, which makes sense for both sides."
- ABG and Bolt will continue to work together on the Lucky and Forever 21 brands and possibly other ABG brands going forward.
Balance sheet: Kuruvilla also said that Bolt has nearly three years of cash runway and that onetime plans to raise new funding at a $14 billion valuation have been put on indefinite hold.
The bottom line: Bolt still has a ton of challenges ahead, as it seeks to validate that $11 billion valuation. But battling in court with one of its highest-profile customers is no longer one of them.