Menlo Ventures Invests in Factory After Public Dispute

Menlo Ventures has invested in Factory, an AI coding startup, days after Factory became the focus of a public dispute among investors and technology executives.

Partner Matt Murphy and his team announced the investment in a blog post on Monday. Menlo declined to disclose the amount. The investment was part of Factory’s latest funding round, which was announced last month at a $5 billion valuation. A source familiar with the deal told TechCrunch the investment was significant for Menlo, not a token gesture, and that the firm would have invested more if space on Factory’s cap table had been available.

The investment follows a dispute involving Factory co-founder and CEO Matan Grinberg and Chris Degnan, who had been an investor at RPT Partners and a board advisor to Factory. Grinberg alleged that he fired Degnan because he feared Degnan may have shared confidential information with Cognition, Factory’s biggest competitor. Degnan, who moved to Cognition as chief revenue officer, disputed that account, saying he resigned and had rebuffed a competing job offer from Grinberg.

Vinod Khosla, whose firm invests in both Factory and Cognition, called Factory a “struggling second tier competitor” and accused Grinberg of lying about Degnan’s departure. Menlo’s blog post praised Factory’s founders, technology and customer relationships. Menlo is not an investor in Cognition. The company’s latest round valued it at $5 billion.