Final month, Brett Adcock, founding father of robotics startup Determine AI, claimed in a post on X that his firm “is now # 1 most sought-after personal inventory within the secondary market.”

However the firm has despatched cease-and-desist letters to at the very least two brokers who run secondary marketplaces, these brokers instructed TechCrunch. These individuals mentioned Determine AI’s cease-and-desist letters demanded that they cease advertising the corporate’s inventory.

Each brokers mentioned they acquired the letters for the primary time after Bloomberg reported in mid-February that Determine was searching for a $1.5 billion spherical at a $39.5 billion valuation — a fifteenfold improve from the $2.6 billion valuation it achieved in February 2024. 

A spokesperson for Determine AI instructed TechCrunch that the corporate sends such letters when it hasn’t approved the dealer to promote its inventory, suggesting that it has a protracted historical past of sending such letters.

“This yr, once we found an unauthorized third-party dealer was advertising Determine shares with out approval from the Determine Board of Administrators, the corporate despatched a stop and desist asking the unauthorized dealer to cease, because it has performed 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 towards undesirable third-party brokers available in the market.”

As a result of Determine is a non-public firm, not a public one, its inventory can’t be simply offered at will by its traders, significantly with no company-authorized occasion. This restriction is why secondary markets have emerged in any respect, together with ones that provide traders other ways to get money from shares forward of an IPO, such as loans secured by their startup shares that develop into repayable when an organization goes public. 

The secondary markets on the receiving finish of Determine’s letters instructed TechCrunch that they produce other theories about why some CEOs dislike share gross sales on their markets.

Current shareholders had been attempting to promote their inventory at a worth that was under the brand new hoped-for $39.5 billion valuation, these brokers mentioned. Each brokers instructed TechCrunch that some firms chafe on the prospect that lower-priced secondary shares might compete with the brand new spherical. 

With out commenting on Determine’s case particularly, Sim Desai, founder and CEO of secondary shares market Hiive, instructed TechCrunch that firms generally 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: Energetic secondary market buying and selling might appeal to extra curiosity for main shares in a brand new increase. 

But when secondary market exercise fails to drive curiosity within the main spherical, the difficulty could lie with the valuation itself. “If somebody is having a tough time promoting one thing, it’s merely a operate of worth and valuation slightly than availability of capital,” Desai mentioned.

Determine has additionally these days been the topic of a number of information articles, describing Determine’s progress with its marquee buyer, BMW. Determine has responded, in at the very least one case, by saying the article had so many inaccuracies that it’s threatening to sue.

As for a way a lot Determine AI raises subsequent — and at what valuation, that continues to be to be seen. Whether or not current traders will have the ability to money out early in secondary transactions can also be to be decided.