Key facts
- Benchmark partners acknowledged the strain on the venture capital pact against backing rivals due to the AI boom.
- The pact historically prevented firms from backing direct competitors.
- Partners cited rapid company evolution and decreasing software development costs as reasons for increased conflicts.
- Benchmark partners stated that transparency and founder commitment are still important, but acknowledged that conflicts are inevitable.
The long-standing venture capital rule against backing direct rivals is being strained by the AI boom, according to partners at Benchmark. Speaking at TechCrunch Disrupt, they acknowledged that rapid company evolution and the decreasing cost of software development are leading to inevitable conflicts.
Benchmark partners noted that while exclusivity remains important at the earliest stages, companies are increasingly expanding into each other's territory. This dynamic, coupled with ambitious founders and the proliferation of AI labs like OpenAI and Anthropic with overlapping investors, is making it difficult to uphold the traditional pact.
The issue was highlighted by a dispute between AI agent startup Factory and its rival Cognition, involving a former Factory board observer who subsequently joined Cognition. Powerhouse investor Vinod Khosla, who backs both companies, sided with the executive, further illustrating the complex relationships.