Menlo Ventures backs Factory after Khosla spat
Original: After Factory’s public spat with Khosla, Menlo proudly invests
Why This Matters
Competing VC endorsements publicly signal where smart money stands in the AI coding race.
Menlo Ventures announced Monday it has invested a significant sum in AI coding startup Factory, part of Factory's recent round at a $5B valuation, following a public dispute between Factory CEO Matan Grinberg and Khosla Ventures.
Menlo Ventures partner Matt Murphy announced in a blog post that the firm has invested in Factory, an AI coding startup that recently raised at a $5 billion valuation. The investment amount was undisclosed, but a source familiar with the deal said it was substantial — not symbolic — and that Menlo would have taken more cap table room if available.
The timing matters. Last week, Factory CEO Matan Grinberg went public alleging he had fired board advisor Chris Degnan of RPT Partners, citing fears that Degnan shared confidential information with rival Cognition after joining it as chief revenue officer. Degnan denied the firing, saying he resigned and had turned down a competing offer from Grinberg.
The controversy drew in Vinod Khosla, who called Factory a 'struggling second tier competitor' and accused Grinberg of lying — despite Khosla Ventures holding stakes in both Factory and Cognition. Sequoia's Shaun Maguire, a Factory backer, publicly defended Grinberg and called Menlo's investment confirmation that Factory is 'on a tear.'
Menlo is not an investor in Cognition. Murphy, who famously backed Anthropic early and later landed deals with Lovable and Legora, praised Factory's founders, technology, and customer relationships. Some VCs are now calling Factory 'the next Anthropic.'