Menlo Ventures Invests in AI Coding Startup Factory After Public Spat with Khosla

Menlo Ventures announced Monday it has invested in AI coding startup Factory, backing a company recently embroiled in a public dispute with Vinod Khosla. The investment was part of Factory's latest funding round, announced last month at a $5 billion valuation. Menlo declined to disclose the amount but a source said the investment was significant, not a token gesture. The move follows a public airing of grievances in which Factory CEO Matan Grinberg alleged he fired investor Chris Degnan as board advisor over fears Degnan shared confidential information with competitor Cognition. Khosla, whose firm backs both Factory and Cognition, called Factory a "struggling second tier competitor" and accused Grinberg of lying. Menlo partner Matt Murphy praised Factory's founders, technology and customer relationships. The endorsement signals Factory is not in the weakened state Khosla implied. Sequoia's Shaun Maguire, also a Factory backer, called Menlo "on a tear."