In a recent development, the robotics startup Figure AI has made headlines by asserting its position as a leading player in the private stock market. The founder, Brett Adcock, recently shared on social media that the company is currently the most sought-after private stock in secondary markets. This claim has sparked significant interest and discussion within the investment community.
However, amidst this growing attention, Figure AI has taken a firm stance by sending cease-and-desist letters to at least two brokers operating in secondary marketplaces. According to reports from these brokers, the letters demanded an immediate halt to the marketing of Figure AI’s stock, indicating the company’s desire to control how its shares are represented in the market.
The timing of these letters coincided with a report from a major news outlet that Figure AI was in discussions for a substantial funding round, aiming for a valuation of $39.5 billion. This figure represents a dramatic increase from its previous valuation of $2.6 billion earlier this year, highlighting the rapid growth and investor interest in the company.
A representative from Figure AI explained that the company routinely issues such letters when it discovers unauthorized brokers promoting its shares. This practice is part of a broader strategy to maintain control over its stock and ensure that any trading activity is sanctioned by the company’s Board of Directors.
As a private entity, Figure AI’s stock is not freely tradable by investors, which is a key reason for the existence of secondary markets. These platforms provide alternative avenues for investors to liquidate their shares, especially in anticipation of an initial public offering (IPO). Some investors even explore options like loans secured by their shares, which can be repaid once the company goes public.
Interestingly, the brokers who received the cease-and-desist letters have speculated on the underlying reasons for Figure AI’s actions. They suggest that existing shareholders may be attempting to sell their shares at prices lower than the anticipated valuation, which could create competition for the new funding round. This situation often leads companies to resist secondary sales, fearing that lower-priced shares could undermine their fundraising efforts.
Sim Desai, the CEO of a secondary shares marketplace, noted that companies sometimes view secondary sales as detrimental to their interests. However, he also posited that active trading in secondary markets could potentially enhance interest in primary shares during new funding rounds.
Ultimately, if secondary market activity does not generate enthusiasm for the primary round, the issue may stem from the valuation itself. Desai pointed out that difficulties in selling shares often relate more to pricing than to the availability of capital.
Figure AI has also been in the spotlight recently due to its collaboration with a prominent automotive manufacturer, which has led to various media reports. In response to some of these articles, Figure AI has expressed concerns over inaccuracies, even hinting at potential legal action.
As for the future, it remains uncertain how much capital Figure AI will successfully raise and at what valuation. The ability of existing investors to cash out through secondary transactions is also yet to be determined, leaving many questions about the company’s trajectory in the coming months.