Factory CEO just accused his VC board adviser of spying for Cognition

Matan Grinberg, co-founder and CEO of the AI coding startup Factory, said in a post on X on Wednesday that he fired VC Chris Degnan from his role as a board adviser. Grinberg alleges that Degnan shared confidential information with Factory's biggest competitor, Cognition.

Two hours after Grinberg's post, Degnan announced on both X and LinkedIn that he had joined Cognition as its chief revenue officer. He also subsequently refuted Grinberg's allegations, saying in a separate X post that he wasn't fired but resigned when he told Grinberg he was taking the job.

Degnan was Snowflake's first sales hire and later spent 11 years as the data company's chief revenue officer. For the past five months, he has been a partner with RPT Partners, a Newport Beach, California, investor in Factory. Degnan is also a go-to-market adviser to startups at the much bigger venture firm Iconiq , a role that dates back to October of last year.

Three-year-old, San Francisco-based Factory is an agentic coding startup whose AI agents can carry out programming tasks largely on their own. The company raised $200 million at a $5 billion valuation this month from Khosla Ventures, Blackstone, Sequoia Capital, Insight Partners, and others. Its customers include Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile.

Grinberg said he sees Cognition, the maker of the Devin coding agent, as his biggest competitor. Cognition raised another $2 billion at a $48 billion valuation earlier this month , and counts Mercedes-Benz, NASA, Goldman Sachs, and Citi as customers.

Grinberg said on X that Degnan had earlier acknowledged having a "casual" conversation with a Cognition executive but had assured Grinberg that he had no interest in working for the competitor. According to Grinberg, Degnan said he had "made too much money" and was "too lazy to go work for Cognition," which Grinberg said he "trusted and believed."

On Monday, however, Degnan apparently disclosed that he had actually been in ongoing talks with Cognition.

This caused Grinberg to grow concerned about how much confidential information Degnan had about Factory, and how much he had shared and might share in the future with his new employer. He says he fired Degnan as a board adviser on Tuesday, writing:

For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor. Chris was subject to confidentiality obligations in connection with his work with Factory. We do not know the extent of the information he shared, but it puts his timely questions about our product roadmap and what the parity gap involves into a new light.