Bolt strikes settlement with Authentic Brands Group
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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.
