After Factory’s public spat with Khosla, Menlo proudly invests

Last day to exhibit your breakthrough to 10,000+ tech leaders at Disrupt is on Oct 2. Book Exhibit Table Now. Disrupt doors open Oct. 13. Get your pass and bring someone with you at 50% off. REGISTER NOW. After Factory’s public spat with Khosla, Menlo proudly invests Julie Bort 12:38 PM PDT · October 5, 2026 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 us 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. When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence. October 13 – 15 San Francisco Get 50% off a second passThe Disrupt experience is meant to be shared. Get your pass and bring a colleague, partner, or peer at 50% off. Cover more ground by making connections, building momentum, and discovering what’s next in the startup ecosystem. At 19, founder raises $11M for Ghost, maker of a $3,499 computer for personal AI Dominic-Madori Davis Federal judge calls Flock ‘indiscriminate mass surveillance’ Anthony Ha Amazon responds to data center backlash, says it no longer uses NDAs Anthony Ha Google thinks SpaceX’s Starship has to launch 1,800 times before space data centers get off the ground Tim Fernholz World’s first enhanced geothermal power plant completed in just 23 months Tim De Chant Google releases Gemini 4 Argon, called its most powerful model yet Lucas Ropek The Pentagon taps Elon Musk and Palmer Luckey to help decide what the military should do next Dominic-Madori Davis

---

Source: TechCrunch

This article has been carefully curated and reformatted for educational and informational purposes. Full credit goes to the original publisher.

---

📚 Visit more helpful articles on Joab Peters Blog