Menlo Ventures has invested in AI coding startup Factory, signaling support shortly after Vinod Khosla publicly labeled the company a struggling second-tier competitor on September 30, 2026. Partner Matt Murphy led the investment for Menlo Ventures.
Founded in 2023, Factory provides tools for the software development lifecycle, including planning and security. The platform is model-agnostic and offers governance controls and sovereign deployment options. Its client list includes NVIDIA, Blackstone, and Palo Alto Networks.
In mid-September 2026, Factory raised $200 million at a valuation of $5 billion. Previously, Khosla Ventures invested $150 million in the startup at a valuation of $1.5 billion.
The public criticism from Khosla Ventures is linked to a rivalry between Factory and Cognition, another AI coding firm backed by the same investor. Over the past month, Factory and Cognition have collectively raised $2.2 billion.
