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After Factory s public spat with Khosla, Menlo proudly invests. Days after Vinod Khosla called Factory a struggling also-ran, Menlo has shown up with a check and a glowing blog post. Menlo Ventures partner Matt Murphy and his team announced Monday in a blog post that the firm has invested in AI coding startup Factory. Menlo declined to comment on how much it invested but said the deal was part of Factory's latest funding round announced last month at a $5 billion valuation. A source familiar with the deal told IntelPro the investment was significant to Menlo - not a token gesture - and that Menlo would have invested more had there been room on the cap table. Ordinarily, something like this wouldn't necessarily be news; startups often extend previous rounds to add new investors. But last week, Factory co-founder and CEO Matan Grinberg was embroiled in a very public airing of dirty laundry when he alleged that he had fired investor Chris Degnan of firm RPT Partners from his role as board advisor. Grinberg said he feared Degnan may have shared confidential information with Factory's biggest competitor, Cognition. The accusation followed Degnan's move to Cognition as its chief revenue officer. A who's who of the tech industry came out of the woodwork either to support Degnan and condemn Factory, or vice versa, but none was more surprising than Vinod Khosla. Khosla's firm is an investor in both Factory and Cognition. But that didn't stop the venerable VC from calling Factory a desperate "struggling second tier competitor," and accusing Grinberg of lying about firing Degnan and impugning his character. Degnan disputed Grinberg's story, saying he resigned and that he'd rebuffed a competing job offer from Grinberg. So Menlo's full-throated endorsement of Factory, which praised its founders, its tech, and its relationship with its customers, is more than a feather in Factory's cap. It's a statement that Factory is not in the state that Khosla implied it was. Murphy famously bet his firm on Anthropic back when it appeared to be an also-ran to OpenAI and has been on a hot streak ever since, landing deals with Lovable and Legora, for instance. So now some VCs are calling Factory "the next Anthropic." Sequoia's Shaun Maguire, also a Factory backer who came out on X in support of Grinberg last week, appears thrilled with Menlo's endorsement, saying the firm is "on a tear." Notably, Menlo is not an investor in competitor Cognition.

Menlo Ventures invests in Factory. SAN FRANCISCO - Factory, a company specializing in self-improving software development, announced that Menlo Ventures has invested in the company, led by Matt Murphy, Managing Partner. Murphy has spent more than two decades investing through major shifts in enterprise technology and has emerged as a leading investor in the AI era. At the outset of the generative AI transformation, he led Menlo's pre-product investment in Anthropic and has since backed companies reshaping the AI and software development stack. His investment in Factory reflects a shared view of where software development is heading: toward autonomous software engineering that is governable, flexible, and measurable. "Matt is one of the legends of Silicon Valley. High integrity, high conviction, and incredible results. He has a track record of recognizing winners before they become obvious," said Matan Grinberg, CEO and cofounder of Factory. "We are moving from a world where engineers build software to a world where engineers build the factories that build the software. Matt and Menlo share our conviction in that future, and we're excited to have him on board as we build it." Factory is building for a future in which every enterprise operates its own autonomous software factory, with engineering teams defining intent and governing outcomes while autonomous systems carry work from an idea through implementation and ongoing improvement. As enterprises entrust more software development to autonomous systems, Factory believes they will need greater control over those systems, including which AI models they use, where their software and engineering context reside, and how autonomous work is governed. Factory is built around model independence, sovereign intelligence, and continual improvement, allowing organizations to operate autonomous software development within their own security, infrastructure, and governance requirements. Discover more Read Daily News Find VC Investors Venture Capital "Matan, Eno and the Factory team are building for a shift in software that I believe will be every bit as significant as the shifts we've seen in AI models themselves," said Murphy. "When we invested in Anthropic, there was plenty of skepticism that they could overcome larger competitors. They stayed focused on the things that mattered and the results speak for themselves. I see that same combination of principles, talent, and execution at Factory. There's a lot more coming, and I'm thrilled to be part of the journey." Factory works with organizations including NVIDIA, Blackstone, Palo Alto Networks, Adyen and EY. The company recently raised a $200 million funding round at a $5 billion valuation and has expanded globally with offices in San Francisco, New York, London and Japan.