Factory CEO just accused his VC board adviser of spying for Cognition

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1:13That's Framer.com slash tcstartups. Rules and restrictions may apply. 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 Denyon from his role as a board advisor. Grinberg alleges that Denyon shared confidential information with Factory's biggest competitor, Cognition. Two hours after Grinberg's post, Denyon announced on both X and LinkedIn that he had joined Cognition as its chief revenue officer. He also subsequently refuted Grinberg's allegations, saying in a separate ex-post that he was not fired but resigned when he told Grinberg he was taking the job.

1:57Denyon was Snowflake's first sales hire and later spent 11 years as the data company's chief revenue officer. For the past five months, he has been a partner with RPT Partners, a Newport Beach, California investor in Factory. Denyon is also a go-to-market advisor to startups at the much bigger venture firm Iconic, a role that dates back to October of last year. Three-year-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 Coastal Adventures, Blackstone, Sequoia Capital, Insight Partners, and others.

2:41Its customers include NVIDIA, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile. Grinberg says he sees Cognition, the maker of the Devon coding agent, as his biggest competitor. 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 Denyon had earlier acknowledged 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, Denyon said he had made too much money and was too lazy to go work for Cognition, which Grinberg said he trusted and believed.

3:31On Monday, Denyon apparently disclosed that he had actually been in ongoing talks with Cognition. This caused Grinberg to grow concerned about how much confidential information Denyon had about Factory and how much he had shared and might share in the future with his new employer. He says he fired Denyon as a board advisor on Tuesday, writing, For weeks, while he sat at 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.

4:18But Denyon disputes that account as well. He says the last factory board meeting he attended was weeks before he had ever spoken to Cognition and that he has not shared confidential information. Denyon also says that when he told Grinberg that he was resigning to take the role at Cognition, Grinberg offered him a full-time job at factory, which he declined. Denyon's post announcing his new job at Cognition does not mention factory. Very notably, it does say that RPT Partners and the firm's managing partner, Chad Peets, will now be working with Cognition. Denyon wrote, I'm thrilled that Chad and the RPT team will be working closely with me in our pursuit of building a generational company.

5:02In the old pre-AI world, a VC firm was especially cautious not to engage in conflict of interest business. But in today's world, many a VC has invested in direct AI competitors, such as OpenAI and Anthropic. In fact, Kostla Ventures is an investor in both Cognition, since at least early 2025, and in Factory. That did not stop the venture firm's founder, Vinod Kostla, from jumping into the drama, seemingly in defense of his bigger portfolio company, Cognition. Nor did it stop Kostla Ventures partner, Keith Raboi, from weighing in as well, in defense of Factory. In a post on X, Košla accused Grinberg of lying about firing Denyon.

5:47He called Factory a struggling second-tier competitor and said Grinberg showed no decency or sense of proper behavior, which shows your desperation. Grinberg replied that he has email receipts to verify his version of events, but did not share them. Meanwhile, Raboy opined on X, it is unethical, per se, to even interview at a competitor. while attending board meetings and board dinners. He added that to even sit for an interview while having access to board-level information and without resigning is absolutely insane. Tracking the back-and-forth, Cognition co-founder and CEO Scott Wu also weighed in on the controversy on X.

6:29He politely expressed respect for the smaller competitor while insisting that his company has no interest in factories info. Wu also contends that Denyon resigned on Monday, but did not refute that Danion was in talks with Cognition before that happened. Either way, there could be consequences for perceived board-level conflicts of interest. VC giant Andreessen Horowitz is reportedly the subject of a Justice Department probe and to its partners serving on competitors' boards. Grenberg argued that startup founders must be able to rely on their board members, saying, Chris's conduct is unacceptable to me.

7:08trust 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. Denyon, Pete's Factory, and Coastal Ventures did not immediately respond to requests for further comment from TechCrunch. That's all for now. For the latest in startup tech news, go to TechCrunch.com.

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