Menlo Ventures Partner Matt Murphy and their team announced on Monday in a blog post that the firm has invested in AI, a programming startup company Factory.

Menlo refused to disclose the specific amount of investment, but indicated that this transaction is part of the latest round of financing announced by Factory last month, when the company was valued at $5 billion. A source familiar with the deal told TechCrunch that this is a rather significant investment for Menlo and is not a symbolic move; if there was still room in Factory's equity structure, Menlo would have been willing to invest even more.

Normally, such news wouldn't necessarily make it to the headlines; startups often extend their fundraising rounds based on previous ones in order to attract new investors. However, just last week, Factory's co-founder and CEO, Matan Grinberg, became embroiled in a rather public scandal. He claimed that he had removed investor Chris Degnan from his role as advisory board member at RPT Partners. Grinberg expressed concerns that Degnan might have shared confidential information with Factory's biggest competitor, Cognition. This accusation came after Degnan switched to work for Cognition and took on the position of Chief Revenue Officer.

Subsequently, a number of well-known figures in the tech industry publicly expressed their positions, with some supporting Degnan and condemning Factory, while others took sides with Factory. However, the most surprising was Vinod Khosla. An institution under Khosla invested in both Factory and Cognition. Nevertheless, this senior venture capitalist still referred to Factory as a "struggling second-tier competitor" and accused Grinberg of lying about firing Degnan and tarnishing his reputation. Degnan also disputed Grinberg's claims, stating that he resigned voluntarily and that he had previously rejected another job offer from Grinberg.

Therefore, Menlo's high-profile endorsement of Factory – praising its founding team, technology, and its relationship with customers – is not just a icing on the cake for Factory. It also serves as a statement: Factory is not in that state as Khosla implies.

Murphy became famous for betting on Anthropic in the early years. At that time, Anthropic seemed to be just a pursuer behind OpenAI, but thereafter he had successive successes, such as predicting Lovable and Legora. As a result, some venture capitalists now refer to Factory as "the next Anthropic".

Sequoia Capital’s Shaun Maguire is also one of the supporters of Factory. Last week, he publicly supported Grinberg on X. He also seems to be very excited about this endorsement of Menlo, stating that Menlo is “on a strong momentum.” It is worth noting that Menlo is not an investor in its competitor Cognition.