Factory hits $1.5B valuation to build AI coding for enterprises

More than three years after the rise of generative AI, AI-assisted coding remains by far the most popular and lucrative use case for the technology.

While several companies – including Anthropic, maker of Claude Code, and Cursor and Cognition – are already vying for dominance, investors believe there is room for at least one additional player.

On Wednesday, Factory, a startup that develops AI agents for enterprise engineering teams, announced it has 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 at Khosla Ventures, joined the startup’s board.

Factory founder Matan Grinberg told the Wall Street Journal that the company’s key differentiator is its ability to switch between different base models, such as Claude from Anthropic or the Chinese AI startup DeepSeek. However, startups like Cursor also don’t rely 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, sent an unsolicited email to Sequoia partner Shaun Maguire. The two bonded over mutual academic interest. (Maguire’s PhD from Caltech is in the same area of ​​physics that Grinberg studied.)

Maguire convinced Grinberg to quit and launch Factory, with Sequoia backing the startup in its seed stages.