Factory CEO just accused his VC board advisor of spying for Cognition

Matan Grinberg, co-founder and CEO of the AI coding startup Factory, said successful a post connected X connected Wednesday that helium fired VC Chris Degnan from relation arsenic a committee advisor. Grinberg alleges that Degnan shared confidential accusation with Factory’s biggest competitor, Cognition.

Two hours later, Degnan announced connected some X and LinkedIn that helium has joined Cognition arsenic its main gross officer.

Degnan was Snowflake’s archetypal income prosecute and aboriginal spent 11 years arsenic the information company’s main gross officer. He has spent the past 5 months arsenic a spouse with RPT Partners, a Newport Beach, California-based capitalist successful Factory. Degnan’s LinkedIn relationship besides says helium is simply a go-to-market advisor to startups for the overmuch bigger task steadfast Iconiq, a relation that dates backmost to October of past year.

Three-old, San Francisco-based Factory is an agentic coding startup whose AI agents tin transportation retired programming tasks mostly connected their own. The institution raised $200 cardinal astatine a $5 cardinal valuation this period from Blackstone, Khosla Ventures, Sequoia Capital, Insight Partners and others. Its customers see Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile arsenic customers.

Grinberg said helium sees Cognition, shaper of the Devin coding agent, arsenic his biggest competitor, helium said. Cognition raised another $2 cardinal astatine a $48 cardinal valuation earlier this month, and counts Mercedes-Benz, NASA, Goldman Sachs, and Citi arsenic customers.

Grinberg said connected X that Degnan had earlier admitted to having a “casual” speech with a Cognition enforcement but had assured Grinberg that helium had nary involvement successful moving for the competitor. According to Grinberg, Degnan said helium had “made excessively overmuch money” and was “too lazy to spell enactment for Cognition,” which Gringer said helium “trusted and believed.” On Monday, however, Degnan seemingly disclosed that helium had really been successful ongoing talks with Cognition.

This caused Grinberg to turn acrophobic implicit however overmuch confidential accusation Degnan had astir Factory, and however overmuch helium had shared and mightiness stock successful the aboriginal with his caller employer. He says helium fired Degnan from the committee connected Tuesday, writing:

“For weeks, portion helium sat successful our committee meetings and advised our enactment team, helium was besides confiding with executives of our largest competitor. Chris was taxable to confidentiality obligations successful transportation with his enactment with Factory. We bash not cognize the grade of the accusation helium shared, but it puts his timely questions astir our merchandise roadmap and what the parity spread involves into a caller light.”

Degnan’s station announcing his caller occupation astatine Cognition doesn’t notation Factory. Very notably, it does accidental that RPT Ventures and the firm’s managing partner, Chad Peets, volition present beryllium moving with Cognition. “I americium thrilled that Chad and the RPT squad volition beryllium moving intimately with maine successful our pursuit of gathering a generational company,” Degnan wrote.

In the old, pre-AI world, a VC steadfast was particularly cautious not to prosecute successful conflict-of-interest business. In today’s world, many a VC has invested successful nonstop AI competitors, specified OpenAI and Anthropic.

Still, determination could beryllium consequences for perceived board-level conflicts of interest. VC elephantine Andreessen Horowitz is reportedly the taxable of a Justice Department probe into its partners serving connected competitors’ boards.

Grinberg argued that startup founders indispensable beryllium capable to trust connected their committee members. “Chris’s behaviour is unacceptable to me. Trust successful Board Membership is 1 of the ineffable bonds successful the Silicon Valley, 1 that helps the startup ecosystem thrive. With it comes an tremendous responsibility. That spot was violated.”

Degnan, Peets, and Factory did not instantly respond to a petition for further comment.