Matan Grinberg, co-founder and CEO of AI coding startup Factory, publicly accused venture capitalist and board adviser Chris Degnan of sharing confidential information with Factory’s leading rival, Cognition. Grinberg revealed on September 30, 2026, that he had removed Degnan from his advisory role after Degnan took a position as Chief Revenue Officer at Cognition just two hours following the announcement of his departure from Factory. Degnan denied being fired, stating that he resigned and had informed Grinberg in advance about his new role. He also refuted allegations of sharing sensitive Factory data.

Degnan has an extensive background as Snowflake’s first sales hire and former Chief Revenue Officer, and recently acted as a partner with RPT Partners, an investor in Factory. Factory, established three years ago, develops autonomous AI coding agents and recently raised $200 million at a $5 billion valuation, backed by major investors such as Khosla Ventures, Blackstone, and Sequoia Capital. Its clientele includes Nvidia, Adobe, and T-Mobile. Factory sees Cognition—known for its Devin coding agent and valued at $48 billion after a $2 billion recent raise—as its primary competitor.

The unfolding controversy has sparked a heated exchange among key players in the startup and venture capital scenes. Vinod Khosla of Khosla Ventures, which backs both Factory and Cognition, criticized Grinberg’s claims and defended Cognition, labeling Factory a "struggling second tier competitor." Meanwhile, venture investor Keith Rabois highlighted ethical concerns about Degnan interviewing with a competitor while still attending Factory board meetings. Cognition CEO Scott Wu expressed respect for Factory but emphasized no interest in its confidential information, acknowledging Degnan’s resignation but not the timing of his discussions with Cognition.

This dispute spotlights the complex nature of conflicts of interest in today’s AI startup ecosystem, where venture firms often invest in competing companies. It raises critical questions about fiduciary duty and the trust essential to board relationships, especially with the ongoing scrutiny of similar issues involving major firms like Andreessen Horowitz. Grinberg emphasized that trust between startups and board members is vital for innovation, describing Degnan’s actions as a serious breach of this trust, a sentiment echoed by many in the tech community.