- Brand licensing and marketing company Authentic Brands Group has settled and dismissed its lawsuit against checkout startup Bolt Financial, San Francisco-based Bolt said today in a press release.
- In the lawsuit, filed in March, ABG had alleged partner Bolt “utterly failed” to deliver on its technology promises, which resulted in lost sales for fashion brands within ABG’s portfolio. Those include Forever, 21, Lucky Brand, Nautica and Reebok. Bolt had denied the claims and sought to dismiss the lawsuit.
- As part of the settlement, ABG has acquired shares of Bolt. Spokespeople for Bolt and ABG wouldn’t comment on the size of ABG’s stake in the checkout startup. The companies will maintain their partnership to provide one-click checkout to Forever 21 and Lucky Brand “while evaluating the possibility of expanding Bolt’s technology to more portfolio brands in the coming months,” per a news release.
ABG had tapped Bolt to develop a new online checkout and customer loyalty platform for ABG’s brand partners by January 2021, but ABG alleged in March that Bolt fell short of its deadline with technology that didn’t work properly.
Bolt says it gives merchants Amazon-like convenience when it comes to online checkout by storing shoppers’ information. ABG has said its portfolio of about 50 brand licenses generates approximately $14 billion in annual retail sales.
In seeking to dismiss ABG’s complaint, Bolt had called the lawsuit a “transparent attempt” to rework terms of the contract between the two companies.
CEO Maju Kuruvilla said in an April statement that “it’s clear that ABG has confidence in Bolt as they are fighting to own significant equity in our business.” A “key aspect” of ABG’s agreement with Bolt included the right to purchase up to 5% of the checkout startup’s equity, which ABG said was “valued at over $500 million” at the time the lawsuit was filed in March.
ABG did not have to pay for its stake in the startup, which will be smaller than 5%, Bloomberg reported after the lawsuit was dismissed, citing an unnamed source.
Despite the accusations made previously, the companies struck an optimistic tone now. The settlement “marks a new chapter in our partnership with ABG,” Kuruvilla said in today’s release. ABG founder and CEO Jamie Salter called Bolt’s checkout technology “exceptional,” per the release.
“ABG looks forward to deepening its ties with Bolt by becoming shareholders under the new leadership of Chief Executive Maju Kuruvilla and we are excited to continue exploring broader opportunities with our businesses,” Salter said in the release. An ABG spokesperson said Wednesday the company wasn’t commenting further.
It’s been a tumultuous year for Bolt. The company raised $355 million in venture capital in January, the same month founder Ryan Breslow unleashed a series of tweets attacking payments fintech Stripe and startup accelerator Y Combinator. Breslow then left his CEO post and became the checkout startup’s executive chairman.
Like other fintechs and payments companies in recent months, Bolt has faced economic headwinds that have led the company to make cuts. The checkout startup cut about one-third of its workforce, or 250 employees, in May. Bolt has raked in $963 million in total venture capital, and was last valued at $11 billion in January.