Factory CEO Removes Adviser After Cognition Recruitment Allegation

Factory co-founder and CEO Matan Grinberg said he removed venture capitalist Chris Degnan from his role as a board adviser after alleging that Degnan shared confidential information with Factory’s largest competitor, Cognition. Degnan announced roughly two hours later that he had joined Cognition as chief revenue officer.

The dispute centres on access, confidentiality and potential conflicts between two heavily funded companies building AI coding agents. Factory, a San Francisco-based agentic coding startup, raised $200 million this month at a $5 billion valuation. Cognition, maker of the Devin coding agent, raised $2 billion earlier this month at a $48 billion valuation.

Allegation follows Cognition job announcement

Grinberg wrote on X that Degnan had initially acknowledged a “casual” conversation with a Cognition executive while saying he had no interest in joining the competitor. Grinberg said Degnan later disclosed that he had been in ongoing discussions with Cognition, prompting concerns about the information he had learned through Factory board meetings and leadership advice.

Grinberg said he ended Degnan’s advisory role on Tuesday. In his post, he said Degnan had been subject to confidentiality obligations and that Factory did not know the extent of any information shared. He also said Degnan’s questions about Factory’s product roadmap and its parity gap now appeared in a different light.

Degnan’s announcement of his Cognition role did not mention Factory. It said that RPT Ventures and its managing partner, Chad Peets, would work closely with him in the pursuit of building Cognition. Degnan spent 11 years as Snowflake’s chief revenue officer after becoming the data company’s first sales hire. He had been a partner at RPT Partners, an investor in Factory, for five months.

AI competition puts board trust under scrutiny

Factory develops AI agents intended to handle programming tasks with substantial autonomy, and it lists Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe and T-Mobile among its customers. Cognition’s customers include Mercedes-Benz, NASA, Goldman Sachs and Citi. The competitive backdrop is also reflected in Cognition’s $1 billion funding round, which detailed Cognition’s $1 billion funding round at a $25 billion valuation.

The case arrives as venture firms increasingly appear around competing AI companies, a contrast with the traditional caution around direct portfolio conflicts. Grinberg argued that founders must be able to rely on the confidentiality and loyalty of board members, describing that trust as a core part of the Silicon Valley startup ecosystem.

Degnan, Peets and Factory did not immediately respond to a request for further comment. For businesses, the episode underlines the need to define confidentiality duties, information access and conflict-management procedures clearly when advisers, investors or executives may engage with direct competitors.