Ryan Breslow, co-founder of the e-commerce software outfit Bolt, was subpoenaed along with the company last year by the U.S Securities and Exchange Commission. The Information reported the news first on Friday.
A letter authored in April by a lawyer representing Bolt investors said the SEC was investigating whether federal securities laws were violated in connection with statements made when Bolt was raising money in 2021. The letter was sent to Bolt’s general counsel as part of a demand to inspect the company’s records on behalf of two Bolt investors, Brian Reinken of WestCap Management and Arjun Sethi of Tribe Capital Management, who were Series C and B investors, respectively.
Per the letter referenced by The Information, it was alleged that Breslow “misled” investors while fundraising 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 that resulted in the Series E investors buying into the Company at a grossly inflated valuation.”
Shortly after that Series E financing was announced in January 2022, Breslow made headlines in both positive and negative ways related to comments he made about competitors and investors, and ended up stepping down as Bolt’s CEO. Soon after, he launched a wellness marketplace called Love that, according to his LinkedIn profile, he founded in January 2022.
Asked about the subpoena and lawsuit, an SEC spokesperson tells TechCrunch that the agency “does not comment on the existence or nonexistence of a possible investigation.”
In a separate matter, a lawsuit filed this week against Breslow by former board member Activant Ventures’ Steve Sarracino alleges that Breslow removed him and two other board members when they declined to help Breslow repay a $30 million loan. Sarracino’s suit also alleges that CEO Maju Kuruvilla and three board members appointed afterward did not force Breslow to make loan repayments.
When reached for comment, Breslow did not respond personally, but brought in a Bolt spokesperson who acknowledged the lawsuit regarding the loan, writing via email that, “Bolt is not the direct target of this litigation, and we continue to seek resolution of the outstanding amount. We remain well-capitalized and the existence of this outstanding obligation to the company does not and will not affect our day-to-day operations or prospects.”
At the time that Bolt announced its Series E funding, the company was a hot commodity.
Speaking about taking in $355 million, Breslow told TechCrunch at the time, “It may seem like a lot of money raised, but actually no, this is capital for us to be competitive. We don’t just want to be on par with competitors, but 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.”
Though Bolt was having no trouble at that moment bringing in large amounts of capital, Breslow has been public about his struggles to attract Silicon Valley investors early-on. It was right after the Series E that he began publishing those thoughts on Twitter.
It wasn’t long after that he stepped down as CEO, insisting that his resignation was not tied to the attention his tweets attracted.
Soon after, it seemed like things continued to be like riding a rollercoaster for Bolt. The company was sued by one of its biggest customers in May 2022 (the case was settled months later). The next day, TechCrunch reported about a blog post CEO Maju Kuruvilla wrote that revealed a 131% year-over-year increase in shopper accounts, and a 192% YoY increase in total active merchant accounts.
Then just a few weeks later, Bolt laid off over 100 people in a restructuring move that Kuruvilla, again via blog post, attributed to shifting market conditions, writing, “It’s no secret that the market conditions across our industry and the tech sector are changing, and against the macro challenges, we’ve been taking measures to adapt our business. In an effort to ensure Bolt owns its own destiny, the leadership team and I have made the decision to secure our financial position, extend our runway, and reach profitability with the money we have already raised.”
Following the Series E, The New York Times reported that Bolt’s leadership began another round of talks with investors to go after additional capital at a higher valuation of $14 billion; however, that has not yet materialized.