Factory CEO accuses VC board advisor of spying for Cognition

The artificial intelligence startup ecosystem has been shaken by a high-profile dispute as Matan Grinberg, co-founder and CEO of the three-year-old coding startup Factory, announced on X that he fired VC Chris Degnan from his board advisory role. Grinberg alleges that Degnan leaked sensitive company data to their biggest rival, Cognition.

Degnan brings an extensive background, having served as Snowflake's first sales hire and later as chief revenue officer for 11 years. Over the past five months, he has worked as a partner at Newport Beach-based RPT Partners, an investor in Factory, while also advising startups at Iconiq since October of last year. Factory recently secured a $200 million funding round at a $5 billion valuation backed by major firms like Khosla Ventures, Blackstone, and Sequoia Capital.

Stock photo for illustration only, not from the actual event

Grinberg's concerns mounted after learning on Monday that Degnan was in ongoing discussions with Cognition, the maker of the Devin coding agent. Cognition recently closed a massive $2 billion funding round at a $48 billion valuation earlier this month. This revelation cast suspicious light on Degnan's previous questions regarding Factory's product roadmap and competitive parity gaps during board meetings.

"For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor.":

Matan Grinberg

In response, Degnan fired back, stating that he was never terminated but instead chose to resign on Monday to join Cognition. He claimed that Grinberg subsequently offered him a full-time role at Factory, which he declined. Notably, Khosla Ventures is listed as an investor in both competing AI startups, underscoring the complex web of financial ties in the current venture capital landscape.