A boardroom exit has two multibillion-dollar AI startups trading accusations
Factory AI alleges a former board member held meetings with rival Cognition while advising the company.
Two high-profile San Francisco-based AI startups, Cognition and Factory AI, are trading accusations following the departure of a former board member and advisor. Chris Degnan, who is joining Cognition as chief revenue officer, is at the center of the dispute. Factory AI's CEO, Matan Grinberg, announced Degnan's termination after discovering he had been holding conversations with Cognition executives while advising Factory on confidential matters.
Grinberg also alleged that Cognition employees had posed as job applicants to gain access to internal information, a claim Factory AI denies.
Cognition CEO Scott Wu dismissed Grinberg's allegations, stating that the company would never ask its engineers or employees to collect information about competitors under-the-table. The dispute highlights the intense competition in the AI coding market, where startups and Big Tech are racing to build autonomous software engineers. Cognition is known for its AI coding agent, Devin, while Factory AI provides a platform to help companies deploy AI agents throughout the software development process.
This clash comes weeks after both companies announced substantial funding rounds, with Factory AI raising $200 million at a $5 billion valuation and Cognition securing over $2 billion at a $48 billion valuation. The situation echoes past board conflicts in Silicon Valley, but the public nature of the accusations is unprecedented.
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