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One-click payment firm Bolt Financial laid off a third of its workforce yesterday, just months after raising $355 million in venture capital funding at a valuation of nearly $11 billion.

Why is this important: For some, the financial ramifications go far beyond lost future wages.

  • In February, we discussed how Bolt offered loans to employees who wanted to purchase acquired stock.
  • We also noted that while the goal was laudable, in that it could help employees reduce their future tax bills, the loan structure could also put employees in the fold of their employer. And this unbalanced compromise was too dangerous (regardless of the “education” provided).

Now we know more:

  • Bolt’s loans were 51% recourse, meaning they are secured by employees’ personal assets, while 49% were secured by stock. All loans related to tax hedging were 100% recourse.
  • Additionally, if an employee stops working at Bolt – for whatever reason – the loan must be repaid within 90 days. Imagine your boss hands you a pink slip and then digs into your pocket, because that’s exactly what happens to some people who worked at Bolt.

A Bolt spokesperson says only a “single-digit” number of laid-off employees took out loans, despite losing more than 200 people their jobs, and the total amount was less than $200,000. Plus, she says, the company plans to “work with” those people.

  • Yes, it’s good news that the hole is not deeper. Especially since Bolt founder and then CEO Ryan Breslow once tweeted that more than half of eligible employees have taken out loans. Perhaps the layoffs were mostly for newer, unearned employees. Breslow, for what it’s worth, has been quiet since yesterday afternoon.
  • But some remaining employees must be freaking out, especially as Bolt suddenly backs off, is being chased by a high-profile partner, and is an e-commerce catalyst heading into what could be a recession. There’s some consolation that loans aren’t currently underwater given the delta between 409a valuations and business valuations, and that Bolt isn’t charging interest, but it’s a tough time for the optimism.
  • Exceptions may be employees who, rather than taking out a loan, took advantage of another Bolt offer to extend their exercise period (the length of which was based on seniority).

There was also talk on social media yesterday that a separate company linked to Breslow provided the loans, but Bolt’s spokesperson says that’s not true (which makes sense, as it was about cashless transactions). She adds that the Nasdaq Private Market handled the process (NPM declined to comment).

The big picture: This story is about Bolt, but a startup lawyer tells me it’s not the only startup to give out these recourse loans. Moreover, some of them now even come with “forfeiture clauses” for loans related to the early exercise of unvested shares, whereby the company does not reimburse at cost if the employee leaves ( Bolt had no forfeiture clause).

The bottom line: Several dotcom-era veterans warned today’s entrepreneurs that such loans were a bad idea, especially since the herd of unicorns were all but certain to be thinned out. They were right.