Form 4: Volition Capital Invests $15 Million in Grove Collaborative, Forfeits Warrants

Volition Capital Fund IV, L.P. invested $15 million in Grove Collaborative Holdings, Inc. in exchange for Series A' Convertible Preferred Stock and the forfeiture of existing warrants.

Summary

• On September 20, 2024, Grove Collaborative Holdings, Inc. entered into a subscription agreement with Volition Capital Fund IV, L.P.
• Volition Fund IV invested $15 million in cash in exchange for 15,000 shares of Series A' Convertible Preferred Stock.
• As part of the agreement, Volition Fund IV forfeited warrants to purchase 1,600,683 shares of Class A Common Stock.
• The terms of Grove Collaborative's existing Series A Convertible Preferred Stock held by Volition Fund IV were modified.
• Lawrence Cheng, a Managing Member of Volition Capital Advisors IV, was elected to the board of directors of the Issuer as a representative of the Reporting Persons.

Sentiment

Score: 7

Explanation: The investment is a positive sign for Grove Collaborative, indicating confidence from a major investor. The forfeiture of warrants simplifies the capital structure. However, the potential dilution from the Series A' Preferred Stock and the Change of Control Limitation introduce some uncertainty.

Positives

• Grove Collaborative receives a $15 million cash infusion from Volition Capital.
• The company eliminates 1,600,683 warrants, potentially reducing future dilution.
• Volition Capital's continued investment signals confidence in Grove Collaborative's prospects.
• Lawrence Cheng, a Managing Member of Volition Capital Advisors IV, was elected to the board of directors of the Issuer as a representative of the Reporting Persons.

Negatives

• The issuance of Series A' Preferred Stock could dilute existing shareholders if converted to Class A Common Stock.
• The terms of the Series A' Preferred Stock include a Change of Control Limitation, which could affect future transactions.
• The forfeiture of warrants by Volition Fund IV could indicate a change in their investment strategy or outlook for the company.

Risks

• The conversion of Series A' Preferred Stock to Class A Common Stock is subject to a Change of Control Limitation, which could impact the value of the preferred stock.
• The managing members of Volition Capital Advisors IV may be deemed to share voting, investment, and dispositive power with respect to the securities, potentially influencing company decisions.
• Future liquidation transactions could impact the value of the Series A' Preferred Stock and the underlying Class A Common Stock.

Future Outlook

The document does not contain explicit forward-looking statements, but the investment suggests continued involvement and potential influence by Volition Capital in Grove Collaborative's future.

Management Comments

• Lawrence Cheng, Managing Member of Volition Capital Advisors IV, was elected to the board of directors of the Issuer as a representative of the Reporting Persons.

Industry Context

This investment reflects ongoing interest in the sustainable consumer products sector, where Grove Collaborative operates. Private equity firms like Volition Capital are actively seeking opportunities in companies with strong growth potential and a focus on environmental, social, and governance (ESG) factors.

Comparison to Industry Standards

• Similar investments in comparable companies often involve a mix of equity and debt financing.
• The forfeiture of warrants is a common practice in private placements to streamline the capital structure.
• The conversion price of $1.9328 per share will be compared to the market price of Grove Collaborative's Class A Common Stock to determine the value of the Series A' Preferred Stock.

Management Changes

Stakeholder Impact

• Shareholders may experience dilution if the Series A' Preferred Stock is converted to Class A Common Stock.
• Employees may benefit from the company's increased financial stability due to the investment.
• Customers may see improved products and services as a result of the capital infusion.
• Suppliers may experience increased demand from Grove Collaborative.

Next Steps

• Conversion of Series A' Preferred Stock into Class A Common Stock based on the terms outlined in the Certificate.
• Potential future liquidation transactions that could impact the value of the securities.
• Monitoring of the market price of Grove Collaborative's Class A Common Stock relative to the conversion price.

Key Dates