Over three years since the rise of generative AI, AI-assisted coding continues to be the most prevalent and profitable application of the technology.
Despite several companies like Anthropic, Cursor, and Cognition competing for leadership, investors see potential for another entrant in the market.
On Wednesday, Factory, a startup creating AI agents for enterprise engineering teams, revealed it secured $150 million, valuing it at $1.5 billion. Khosla Ventures led the funding round with contributions from Sequoia Capital, Insight Partners, and Blackstone. Keith Rabois from Khosla Ventures joined Factory’s board.
Factory’s founder, Matan Grinberg, mentioned to the Wall Street Journal that the company stands out due to its ability to switch between different foundation models, such as Anthropic’s Claude or DeepSeek. However, companies like Cursor also employ multiple models for code generation.
Factory’s clients include engineering teams at Morgan Stanley, Ernst & Young, and Palo Alto Networks.
The startup started in 2023 when Grinberg, then a UC Berkeley PhD student, contacted Sequoia partner Shaun Maguire via email. They connected over shared academic interests. (Maguire holds a PhD from Caltech in Grinberg’s field of study.)
Maguire persuaded Grinberg to leave his studies and set up Factory, with Sequoia supporting the startup in its initial phase.