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Ryan Breslow, co-founder of e-commerce software outfit Bolt, was subpoenaed along with the company by the U.S. Securities and Exchange Commission last year. The Information was the first to release the news on Friday.
A letter written in April by an attorney representing Bolt investors said the SEC was investigating whether federal securities laws were violated in connection with statements made when Bolt raised funds in 2021. The letter was sent to Bolt’s general counsel as part of a fact-finding mission.
According to the letter referenced by The Information, two Bolt investors, Brian Reinken of WestCap Management and Arjun Sethi of Tribe Capital Management, sued Breslow and Bolt’s board of directors, alleging that Breslow had “misled” them into raising money for the company’s $355 million Series E round, valuing the company at $11 billion.
The attorney representing WestCap and Tribe Capital wrote that Breslow “made material misrepresentations about the company’s financial condition and product pipeline, which led Series E investors to buy the company at a grossly high valuation.”
Shortly after the Series E financing was announced in January 2022, Breslow made headlines in both positive and negative ways regarding comments he made about competitors and investors, eventually stepping down as Bolt’s CEO. Soon after, he launched a wellness marketplace called Love, which he founded in January 2022, according to his LinkedIn profile.
When asked about the subpoena and lawsuit, an SEC spokesperson tells TechCrunch that the agency “is not commenting on whether or not a possible investigation exists.”
In a separate lawsuit filed against Breslow this week by former Activant Ventures board member Steve Sarracino, Sarracino alleges that Breslow removed him and two other board members when they refused to help Breslow repay a $30 million loan. Sarracino’s lawsuit also alleges that CEO Maju Kuruvilla and three later-appointed board members failed to force Breslow to repay loans.
When reached for comment, Breslow did not personally respond, but reached out to a Bolt spokesperson who acknowledged the lawsuit regarding the loan, writing by email: “Bolt is not the immediate target of this lawsuit and we continue to work to resolve the outstanding amount. We remain well capitalized and the existence of this outstanding liability to the company has no impact on our day-to-day operations or prospects.”
At the time Bolt announced its Series E financing, the company was a hot commodity.
Speaking of raising $355 million, Breslow told TechCrunch at the time, “It may seem like a lot of money raised, but no, this is capital for us to be competitive. We not only want to be on par with competitors, but also to be better. The capital will enable us to bring in the best talent, make strategic acquisitions and expand into Europe, which is important to us.”
While Bolt had no trouble raising large amounts of capital at the time, Breslow has publicly stated that he struggled early on to attract investors from Silicon Valley. It was right after Series E that he started publishing those thoughts on Twitter.
Not long after, he resigned as CEO, insisting that his resignation was not tied to the attention his tweets garnered.
Soon after, it seemed that it was still like riding a rollercoaster for Bolt. The company was sued in May 2022 by one of its largest clients (the case was settled months later). The next day, TechCrunch reported on a blog post CEO Maju Kuruvilla wrote revealing a 131% year-over-year increase in shopper accounts and a 192% year-over-year increase in the total number of active merchant accounts.
Just a few weeks later, Bolt laid off more than 100 people in a restructuring that Kuruvilla, again via a blog post, attributed to changing market conditions, writing: “It is no secret that market conditions in our industry and the tech sector are changing, and against the macro challenges we have taken steps to adapt our business. In an effort to ensure that Bolt is in control of his own destiny, the leadership team and I have made the decision to secure our financial position, extend our runway and become profitable with the funds we have already raised.”
After Series E, The New York Times reported that Bolt’s leadership began another round of investor talks to look for additional capital at a higher valuation of $14 billion; however, that has not yet happened.
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