Factory CEO accuses VC adviser of leaking confidential data to rival Cognition

Matan Grinberg, co-founder and chief executive of the San Francisco-based AI coding startup Factory, posted on X on Wednesday that he removed venture-capital adviser Chris Degnan from the company’s board after learning that Degnan had disclosed confidential details to Factory’s chief rival, Cognition. Grinberg’s statement said Degnan had attended board meetings while simultaneously confiding in executives at Cognition, raising concerns about the extent of any information that may have been shared.

Degnan, who spent more than a decade as chief revenue officer at Snowflake and was the firm’s first sales hire, had been a partner at RPT Partners for the past five months, serving as a go-to-market adviser to Factory. On the same day as Grinberg’s post, Degnan announced on X and LinkedIn that he had accepted the role of chief revenue officer at Cognition. In a follow-up X message, Degnan denied being fired, asserting that he resigned after informing Grinberg of his new position and that he had never disclosed proprietary data.

Factory, a three-year-old startup that builds autonomous AI agents for software development, closed a $200 million financing round this month that valued the company at $5 billion. Its investor roster includes Khosla Ventures, Blackstone, Sequoia Capital, Insight Partners and others, and its client list features Nvidia, Adobe, T-Mobile and several major financial institutions. Cognition, the maker of the Devin coding agent, raised an additional $2 billion earlier this month, pushing its valuation to $48 billion and securing customers such as Mercedes-Benz, NASA and Goldman Sachs.

The dispute quickly attracted commentary from prominent venture figures. Vinod Khosla, founder of Khosla Ventures, posted on X that Grinberg’s claim of firing Degnan was false and labeled Factory a “struggling second-tier competitor.” Keith Rabois, a partner at Khosla Ventures, described it as unethical for a board adviser to interview with a competitor while still privy to confidential information. Cognition’s co-founder and CEO Scott Wu responded politely, stating that his company had no interest in Factory’s data and acknowledging Degnan’s resignation but not confirming the timing of prior talks.

The episode underscores a growing tension in the AI-focused venture ecosystem, where investors often hold stakes in multiple competing startups. Khosla Ventures itself backs both Factory and Cognition, a fact that has not prevented public sparring over the matter. The controversy also arrives amid reports that Andreessen Horowitz is under Justice Department scrutiny for board-level conflicts of interest, suggesting that regulators may soon examine similar situations more closely.

For founders, the incident serves as a reminder that board members are expected to safeguard sensitive information and avoid even the appearance of divided loyalties. As the dispute unfolds, both companies have declined further comment, leaving investors and industry observers to watch whether any legal or contractual actions will follow and how the episode might shape future board appointment practices in the rapidly evolving AI sector.