Benchmark: AI Is Breaking the No-Rival-Backing Rule
Original: Even Benchmark thinks AI is eroding the venture pact against backing rivals
Why This Matters
VC conflict norms shape founder trust and deal terms across the entire startup ecosystem.
At TechCrunch Disrupt 2026, Benchmark partners acknowledged AI is eroding VC's unwritten rule against backing competing startups, citing rapid pivots and zero-cost software development as key drivers.
For decades, venture capital operated on a straightforward norm: don't back two companies competing head-to-head. That norm is fraying fast, and even Benchmark — a firm built on long-term, founder-first partnerships — is saying so out loud.
Speaking at TechCrunch Disrupt this week, Benchmark partners cited the accelerating pace of AI as the main pressure point. Partner Eric Vishria acknowledged conflicts are now unavoidable: "The harsh reality of this world is every company is evolving very quickly." He insisted Benchmark keeps information confidential and stays committed to each founder, but conceded, "Things are evolving. There's no doubt about that."
Partner Chetan Puttagunta pointed to near-zero software development costs as a structural driver. When founders see unclaimed territory, he said, they move to claim all of it — meaning portfolio companies increasingly collide. Partner Peter Fenton called the conflict problem "kryptonite" and the firm's toughest challenge.
The remarks came weeks after a pointed public dispute: Factory, a coding AI startup, fired board observer Chris Degnan, alleging improper contact with rival Cognition. Degnan denied wrongdoing and joined Cognition as CRO. Khosla Ventures, which backs both firms, had Vinod Khosla publicly blast Factory's CEO on X. OpenAI and Anthropic already share dozens of common investors.