AI Startup Fires Board Advisor Over Rival Leaks

Matan Grinberg, co-founder and CEO of AI coding startup Factory, announced on Wednesday that he had terminated VC Chris Degnan's role as a board advisor. Grinberg alleges Degnan shared confidential information with Factory's primary competitor, Cognition. Coincidentally, Degnan announced his new position as chief revenue officer at Cognition on the same day.

Degnan, formerly Snowflake's chief revenue officer, had been a partner at RPT Partners, an investor in Factory, and a go-to-market advisor for Iconiq. Factory, a three-year-old startup valued at $5 billion after a recent $200 million funding round, develops AI agents for programming tasks. Its competitors, like Cognition, which develops the Devin coding agent, have also seen significant recent investment, with Cognition raising $2 billion at a $48 billion valuation.

Grinberg stated on X that Degnan had previously assured him he was not interested in working for Cognition, despite a "casual" conversation with one of their executives. However, Grinberg claims Degnan later disclosed ongoing talks with Cognition, raising concerns about the extent of shared confidential information regarding Factory's product roadmap and competitive strategies. Grinberg emphasized that trust in board membership is vital for the startup ecosystem and that this trust had been violated.

Degnan's announcement of his new role at Cognition mentioned that RPT Ventures and its managing partner, Chad Peets, would also be working closely with Cognition. This situation occurs amid broader discussions about venture capital firms investing in direct AI competitors and potential consequences for perceived board-level conflicts of interest, with reports of a Justice Department probe into Andreessen Horowitz for similar reasons.