Khosla Trashes Own Portfolio Firm Factory AI in Cognition Feud

Vinod Khosla, founder of Khosla Ventures, publicly accused one of his own portfolio companies of dishonesty this week — and in doing so exposed the growing hazards of venture firms backing direct rivals in artificial intelligence.

Khosla took to X to attack Factory AI while backing Cognition, the other startup in his portfolio, in an escalating feud over a senior hire and allegations of improper conduct, as reported by Business Insider, Dealroom and other outlets. Khosla Ventures holds stakes in both companies.

The dispute began when Factory's chief executive, Matan Grinberg, said the company was ending its relationship with Chris Degnan, a board observer and adviser, over what Grinberg described as unethical behavior tied to Cognition. Degnan countered that he had already resigned before any termination and denied sharing Factory information with the competitor. Soon after, Degnan announced he had joined Cognition as chief revenue officer.

Cognition chief executive Scott Wu denied that his company had asked employees to collect information on rivals "under-the-table," pushing back on accusations that the startup had crossed ethical lines.

Khosla then escalated the confrontation with a post on X directed at Factory.

"You are a struggling second tier competitor that is more unethical and lying just because you have no decency or sense of proper behavior and shows your desperation. Straight out lying about if Chris being fired I thought would be below even you," Khosla said on X.

The two companies at the center of the fight are racing to win over software developers with AI tools, and both carry nine-figure price tags. Cognition, which develops the coding assistant Devin, raised $2 billion at a $48 billion valuation in September. Factory AI raised $200 million the same month at a $5 billion valuation.

The backlash was immediate. Founders and investors on X argued that Khosla had gone far beyond the usual bounds of venture capital behavior.

Palmer Luckey, co-founder of defense technology company Anduril, questioned why Khosla would have invested in Factory at a multibillion-dollar valuation only weeks earlier if he believed so little in the company. Spenser Skates, chief executive of analytics company Amplitude, called the episode "another great reason not to raise from Vinod," while describing Khosla as one of the harshest pressure players in the venture ecosystem.

Keith Rabois, a managing director at Khosla Ventures, appeared to back Cognition's side, saying it was "absolutely insane" for someone to sit for an interview while still having access to board-level information. Nathan Lands, an entrepreneur and angel investor in Factory, said Khosla had crossed a line and warned founders not to accept the argument that conflicts of interest do not matter.

Other venture investors responded with memes, underscoring how public and personal startup disputes have become on X.

The episode fits a broader pattern in the AI boom. As Dealroom and CB Insights have noted, major investors increasingly hold stakes in several competing companies at once, including both Factory and Cognition. The strategy has become standard practice in frontier AI, where firms such as Sequoia Capital and Founders Fund have backed both OpenAI and Anthropic despite fierce rivalry between the two labs.

Openly trashing one portfolio company while backing another remains rare, and Khosla's comments have turned an already tense fight over one executive's move into a broader cautionary tale. For founders weighing capital from firms with stakes on both sides of a market, the message is that those conflicts can erupt in public — and at any time.