More than three years after the advent of generative AI, AI-assisted coding remains the most popular and profitable use case for the technology.
Several companies are already vying for dominance, including Claude Code maker Anthropic, Cursor and Cognition, but investors believe there is room for at least one more player.
On Wednesday, Factory, a startup developing AI agents for enterprise engineering teams, announced that it had received $150 million in funding at a valuation of $1.5 billion. The round was led by Khosla Ventures, with participation from Sequoia Capital, Insight Partners, and Blackstone. Keith Rabois, Managing Director of Khosla Ventures, has joined the startup’s board of directors.
Factory founder Matan Grinberg told the Wall Street Journal that the company’s key differentiator is its ability to switch between different underlying models, such as Anthropic’s Claude or Chinese AI startup DeepSeek. But startups like Cursor also don’t rely on a single model to generate code.
Factory’s customers include engineering teams from Morgan Stanley, Ernst & Young, and Palo Alto Networks.
The startup was founded in 2023 after Grinberg, then a PhD student at UC Berkeley, sent a cold email to Sequoia partner Shaun Maguire. The two bonded over their mutual academic interests. (Maguire’s PhD from Caltech is in the same field of physics that Grinberg was studying.)
Maguire convinced Grinberg to quit and start Factory, and Sequoia supported the startup at the seed stage.
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