Greater than three years after the emergence of generative AI, AI-assisted coding stays by far the preferred and lucrative use case for the technology.
Although multiple corporations — including Anthropic, maker of Claude Code, in addition to Cursor and Cognition — are already vying for dominance, investors imagine there may be room for at the least yet another player.
On Wednesday, Factory, a startup developing AI agents for enterprise engineering teams, announced it had raised $150 million at a $1.5 billion valuation. The round was led by Khosla Ventures, with participation from Sequoia Capital, Insight Partners, and Blackstone. Keith Rabois, a managing director at Khosla Ventures, joined the startup’s board.
Factory founder Matan Grinberg told the Wall Street Journal that the corporate’s key differentiator is its ability to change between different foundation models, akin to Anthropic’s Claude or Chinese AI startup DeepSeek. Nonetheless, startups like Cursor also don’t depend on a single model to generate code.
Factory’s customers include engineering teams at Morgan Stanley, Ernst & Young, and Palo Alto Networks.
The startup was founded in 2023 after Grinberg, then a PhD student at UC Berkeley, cold-emailed Sequoia partner Shaun Maguire. The 2 bonded over mutual academic interest. (Maguire’s PhD from Caltech is in the identical area of physics Grinberg was studying.)
Maguire convinced Grinberg to drop out and launch Factory, with Sequoia backing the startup on the seed stage.
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