A VC board adviser dispute erupted after Factory CEO Matan Grinberg accused Chris Degnan of sharing confidential information with Cognition, Factory’s biggest competitor, after Degnan joined as chief revenue officer. Grinberg’s accusation is disputed: Degnan said he resigned before taking the job and denied sharing company information. TechCrunch reported the dispute.
Grinberg said on X on Wednesday that he had fired Degnan on Tuesday. About two hours after Grinberg’s post, Degnan announced his Cognition appointment on X and LinkedIn. Degnan disputed Grinberg’s account, saying he resigned Monday after telling Grinberg he was taking the job.
VC Board Adviser Dispute Turns on Competing Accounts
Grinberg said Degnan had previously described a conversation with a Cognition executive as “casual” and said he had no interest in working for the rival. According to Grinberg, Degnan said he had “made too much money” and was “too lazy to go work for Cognition.” Grinberg said he trusted that explanation.
Grinberg said Degnan disclosed on Monday that he had been in ongoing talks with Cognition. That disclosure, Grinberg said, raised concerns about what confidential information Degnan knew and whether he had shared it or might share it with his new employer.
In a statement quoted by TechCrunch, Grinberg said Degnan had attended board meetings and advised Factory’s leadership while also confiding with executives at the competitor. Grinberg said Degnan had confidentiality obligations and that Factory did not know the extent of any information shared. He said Degnan’s questions about Factory’s product roadmap and “parity gap” now looked different to him.
Degnan denied sharing confidential information. He said his last Factory board meeting was weeks before he had “ever spoken” to Cognition. Degnan also said Grinberg offered him a full-time Factory position after he disclosed his resignation and Cognition move, but Degnan declined it.
Factory and Cognition Compete in AI Coding
Factory is a three-year-old San Francisco startup whose AI agents can carry out programming tasks largely on their own. The company raised $200 million at a $5 billion valuation this month from Khosla Ventures, Blackstone, Sequoia Capital, Insight Partners and others.
Grinberg has called Cognition, maker of the Devin coding agent, Factory’s biggest competitor. Cognition raised another $2 billion at a $48 billion valuation earlier this month. Readers following capital into AI infrastructure startups can also see Grit Daily’s report on institutional capital for AI startups.
Degnan’s announcement said RPT Partners and its managing partner, Chad Peets, would work closely with Cognition. Degnan had been a partner at RPT Partners for five months. He also advised startups at Iconiq since October of last year.
Investors Weigh In as the Dispute Spreads
Khosla Ventures is an investor in both Factory and Cognition, according to the report. Its founder, Vinod Khosla, accused Grinberg of lying about firing Degnan and described Factory as a “struggling second tier competitor.” Grinberg replied that he had email records supporting his account but did not share them.
Khosla Ventures partner Keith Rabois defended Factory, writing that interviewing with a competitor while attending board meetings and dinners was unethical. Cognition CEO Scott Wu said his company had “no interest in Factory’s info” and expressed respect for the smaller competitor. Wu also said Degnan resigned Monday, without disputing that talks with Cognition had begun earlier.
The report said venture capital firm Andreessen Horowitz was reportedly the subject of a Justice Department probe involving partners serving on competitors’ boards. Grinberg said founders must be able to trust board members, calling that trust a responsibility of board membership. TechCrunch said it updated its story to include responses from Degnan, Khosla, Rabois and Wu. The competing accounts leave the timing of Degnan’s resignation and any disclosure of Factory information disputed.
Grit Daily has also covered startup financing, including India’s startup funding changes, and a founder’s valuation goal at Elysian Minds.
