Factory CEO fires VC board advisor Chris Degnan over alleged Cognition leaks

Factory chief executive Matan Grinberg says he fired venture capitalist Chris Degnan from his board advisor role on Wednesday, alleging Degnan shared confidential information with Cognition, the rival Factory regards as its biggest competitor. According to TechCrunch, Grinberg announced the dismissal in a post on X — and roughly two hours later, Degnan announced on X and LinkedIn that he had joined Cognition as its chief revenue officer.

How the falling-out unfolded

Grinberg wrote that Degnan had earlier admitted to a casual conversation with a Cognition executive but insisted he had no interest in working for the competitor, saying he had made too much money and was too lazy to take a job there. Grinberg says he believed him. On Monday, by Grinberg's account, Degnan revealed he had actually been in ongoing talks with Cognition, prompting concerns about how much he knew about Factory and what he might share with his new employer. Grinberg removed him from the board on Tuesday.

Grinberg wrote that while Degnan sat in Factory's board meetings and advised its leadership for weeks, he was simultaneously confiding with executives of the company's largest competitor. Degnan was subject to confidentiality obligations through his Factory work, Grinberg said, and although Factory does not know the extent of what was shared, his pointed questions about the product roadmap and a competitive "parity gap" now look different in that light.

Degnan's move and his firm's ties

Degnan's announcement of his new role makes no mention of Factory, but it does say that RPT Ventures and the firm's managing partner, Chad Peets, will now be working with Cognition. Degnan had spent the past five months as a partner at RPT, a Newport Beach, California-based investor in Factory. Before that, he was Snowflake's first sales hire and spent 11 years as the data company's chief revenue officer, and his LinkedIn profile lists a go-to-market advisory role at the larger venture firm Iconiq dating to October of last year. TechCrunch reports that Degnan, Peets and Factory did not immediately respond to requests for comment.

Two heavily funded rivals

The dispute comes as both companies close major rounds. Factory, a three-year-old San Francisco startup whose AI agents carry out programming tasks largely on their own, raised $200 million at a $5 billion valuation this month from Blackstone, Khosla Ventures, Sequoia Capital, Insight Partners and others, with customers including Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe and T-Mobile. Cognition, maker of the Devin coding agent, raised $2 billion at a $48 billion valuation earlier this month and counts Mercedes-Benz, NASA, Goldman Sachs and Citi among its customers.

A governance flashpoint in the AI era

Grinberg framed the firing as a defence of a basic norm, describing board trust as one of the "sacred bonds" of Silicon Valley and adding that "that trust was violated." The incident also lands amid renewed scrutiny of investor conflicts. As TechCrunch notes, venture firms were historically careful to avoid conflict-of-interest business, but many now invest in direct AI competitors such as OpenAI and Anthropic. Andreessen Horowitz is reportedly the subject of a US Justice Department probe into partners serving on competitors' boards.

Why it matters

Factory says it does not know how much confidential material may have reached its largest competitor, and in a market defined by a fast-moving roadmap race, even partial exposure could matter commercially. The episode gives founders a concrete case study in the risks of granting investors and their partners board access, and it may push startups toward tighter confidentiality terms or more limited advisor roles. For RPT and Degnan, the reputational questions are immediate; for the wider AI tooling sector, it is a reminder that the contest between Factory and Cognition is now being fought at the boardroom table as well as in the product.