Factory CEO simply accused his VC board advisor 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 role as a board advisor. Grinberg alleges that Degnan shared confidential information with Factory’s biggest competitor, Cognition.

Two hours later, Degnan announced on both X and LinkedIn that he has joined Cognition as its chief revenue officer.

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

Three-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 Blackstone, Khosla Ventures, Sequoia Capital, Insight Partners and others. Its customers include Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile as customers.

Grinberg said he sees Cognition, maker of the Devin coding agent, as his biggest competitor, he said. 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 admitted to 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 Gringer 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 over 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 from the board 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.”

Degnan’s post announcing his new job at Cognition doesn’t mention Factory. Very notably, it does say that RPT Ventures and the firm’s managing partner, Chad Peets, will now be working with Cognition. “I am thrilled that Chad and the RPT team will be working closely with me in our pursuit of building a generational company,” Degnan wrote.

In the old, pre-AI world, a VC firm was especially cautious not to engage in conflict-of-interest business. In today’s world, many a VC has invested in direct AI competitors, such OpenAI and Anthropic.

Still, there could be consequences for perceived board-level conflicts of interest. VC giant Andreessen Horowitz is reportedly the subject of a Justice Department probe into its partners serving on competitors’ boards.

Grinberg argued that startup founders must be able to rely on their board members. “Chris’s conduct is unacceptable to me. Trust in Board Membership is one of the sacred bonds in the Silicon Valley, one that helps the startup ecosystem thrive. With it comes an enormous responsibility. That trust was violated.”

Degnan, Peets, and Factory did not immediately respond to a request for further comment.