More than three years after the advent of generative AI, AI-assisted coding remains the technology’s most popular and profitable use case.
Several companies are already vying for supremacy, including Claude Code developer Anthropic, Cursor and Cognition, but investors think there’s room for at least one more.
On Wednesday, Factory, a startup that develops AI agents for enterprise engineering teams, announced it had raised $150 million 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 and Chinese AI startup DeepSeek. But startups like Cursor also don’t rely on a single model to generate code.
Factory customers include engineering teams from Morgan Stanley, Ernst & Young, and Palo Alto Networks.
The startup was founded in 2023 after Greenberg, then a doctoral student at the University of California, Berkeley, coldly emailed Sequoia partner Sean Maguire. The two bonded over their mutual academic interests. (Maguire’s PhD at Caltech is in the same area of physics that Greenberg studied.)
Maguire convinced Greenberg to drop out and start Factory, which Sequoia backed at the seed stage.
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