After Factory’s public spat with Khosla, Menlo proudly invests
Days after Vinod Khosla called Factory a struggling also-ran, Menlo has shown up with a check and a glowing blog post.
Menlo Ventures has announced its investment in AI coding startup Factory, following a public spat between Factory co-founder Matan Grinberg and investor Chris Degnan. Menlo declined to disclose the exact amount of the investment, but stated that it was a significant one, not a token gesture, and that they would have invested more if there had been room on the cap table.
This endorsement comes amidst a contentious situation between Factory and rival Cognition, where Grinberg accused Degnan of leaking confidential information to Cognition and Khosla, an investor in both companies, called Factory a "struggling second-tier competitor." Despite this, Menlo's full-throated support for Factory, praising its founders, technology, and relationships with customers, is seen as a strong endorsement, positioning Factory as not in the state Khosla suggested.
Menlo's CEO Matt Murphy, who previously backed Anthropic, sees Factory as "the next Anthropic" and notes that Sequoia's Shaun Maguire, also a backer, is thrilled with Menlo's endorsement, saying the firm is "on a tear." Importantly, Menlo is not an investor in Cognition.
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