Key facts
- Factory CEO Matan Grinberg accused VC advisor Chris Degnan of spying for rival Cognition.
- Grinberg fired Degnan from his board advisor role at Factory on Tuesday.
- Degnan announced his new role as chief revenue officer at Cognition on Wednesday.
- Factory recently raised $200 million at a $5 billion valuation.
- Competitor Cognition raised $2 billion at a $48 billion valuation earlier this month.
Factory CEO Matan Grinberg publicly accused VC board advisor Chris Degnan of spying for Cognition, the AI coding startup's primary competitor. Grinberg stated on X that he fired Degnan from his advisory role on Tuesday after Degnan allegedly shared confidential information with Cognition.
Two hours after Grinberg's accusation, Degnan announced on social media that he had joined Cognition as its chief revenue officer. Degnan's announcement also noted that RPT Ventures, where he was a partner and which invested in Factory, would be working closely with him at Cognition.
Grinberg detailed that Degnan had previously assured him he had no interest in working for Cognition, despite admitting to a "casual" conversation with an executive. However, Degnan apparently disclosed ongoing talks with Cognition on Monday, prompting Grinberg's concern about the extent of shared confidential information, particularly regarding Factory's product roadmap.
Factory, a three-year-old San Francisco-based company, develops AI agents capable of independent programming tasks. It recently secured $200 million in funding at a $5 billion valuation from investors including Blackstone, Khosla Ventures, and Sequoia Capital. Cognition, maker of the Devin coding agent, is considered Factory's biggest rival and recently raised $2 billion at a $48 billion valuation.
Grinberg emphasized the importance of trust in board memberships within the startup ecosystem, stating that Degnan's conduct violated this trust. He expressed concern over how much confidential information Degnan possessed about Factory and what he might share with his new employer.