Last month, Brett Adcock, founding father of a robotics startup Figure AI, claimed in a put up on X that his firm “is now # 1 most sought-after personal inventory within the secondary market.”
But the corporate has despatched cease-and-desist letters to not less than two brokers who run secondary marketplaces, these brokers instructed TechCrunch.These folks stated Figure AI’s cease-and-desist letters demanded that they cease advertising and marketing the corporate’s inventory.
Both brokers stated they obtained the letters for the primary time after Bloomberg reported in mid-February that Figure was in search of a $1.5 billion spherical at a $39.5 billion valuation – a 15-fold improve from the $2.6 billion valuation it achieved in February, 2024.
A spokesperson for Figure AI instructed TechCrunch that the corporate sends such letters when the corporate hasn’t licensed the dealer to promote its inventory, suggesting that it has an extended historical past of sending such letters.
“This yr, once we found an unauthorized third-party dealer was advertising and marketing Figure shares with out approval from the Figure Board of Directors, the corporate despatched a stop and desist asking the unauthorized dealer to cease, because it has accomplished beforehand when different unauthorized brokers had been found,” the spokesperson instructed TechCrunch in a written assertion. “We don’t permit secondary market buying and selling in our shares with out board authorization and the corporate will proceed to guard itself in opposition to undesirable third-party brokers available in the market.”
Because Figure is a non-public firm, not a public one, its inventory can’t be simply offered at will by its traders, significantly with out a company-authorized occasion. This restriction is why secondary markets have emerged in any respect, together with ones that supply traders alternative routes to get money from shares forward of an Stock Launch, comparable to loans secured by their startup shares that grow to be repayable when an organization goes public.
The secondary markets on the receiving finish of Figure’s letters instructed TechCrunch that they produce other theories about why some CEOs dislike share gross sales on their markets.
Existing shareholders had been attempting to promote their inventory at a worth that was beneath the brand new hoped-for $39.5 billion valuation, these brokers stated. Both brokers instructed TechCrunch that some corporations chafe on the prospect that lower-priced secondary shares may compete with the brand new spherical.
Without commenting on Figure’s case particularly, Sim Desai, founder and CEO of secondary shares market Hiive, instructed TechCrunch that corporations typically block direct secondary gross sales as a result of they imagine “it’s a zero-sum recreation.”
Desai, naturally, argues that the reverse may very well be true: lively secondary market buying and selling may entice extra curiosity for main shares in a brand new elevate.
But if secondary market exercise fails to drive curiosity within the main spherical, the problem could lie with the valuation itself. “If somebody is having a tough time promoting one thing, it’s merely a perform of worth and valuation quite than availability of capital,” Desai stated.
Figure has additionally these days been the topic of a number of information articles, describing Figure’s progress with its marquee buyer, BMW. Figure has responded, in not less than one case, by saying the article had so many inaccuracies that it’s threatening to sue.
As for a way a lot Figure AI raises subsequent – and at what valuation, that is still to be seen. Whether present traders will be capable of money out early in secondary transactions can be to be decided.
