Your investor's other AI startup is already reading your board deck

Khosla Ventures owns a piece of Factory. It has also owned a piece of Cognition since at least early 2025. This week Factory's chief executive, Matan Grinberg, accused a board adviser of passing confidential information to Cognition. Vinod Khosla then went on X and called Factory a "struggling second tier competitor". Factory had raised $200m at a $5bn valuation only this month, with Khosla among the investors. I have not seen a clearer example of where a conflicted investor's loyalty goes once a fight starts. Khosla sided with the bigger holding: Cognition was valued at $48bn after raising $2bn this month.

The facts of the Chris Degnan episode are disputed, and the allegations are Grinberg's. Degnan spent 11 years as Snowflake's chief revenue officer and is a partner at RPT Partners, a Factory investor. Grinberg says he fired Degnan after learning he had been in ongoing talks with Cognition while advising Factory. Degnan says he resigned rather than being fired. He says his last Factory board meeting came weeks before he had spoken to Cognition, and that he shared nothing confidential. Cognition's chief executive, Scott Wu, says his company has no interest in Factory's information. Grinberg says he has emails that support his account but has not published them. I can't tell you who is right.

I don't think founders need to know who is right to learn from it. Two hours after Grinberg's post, Degnan announced he was Cognition's chief revenue officer. His post said RPT and its managing partner, Chad Peets, would be working closely with him there. So a fund on Factory's cap table now works with the company Grinberg calls his biggest rival. Whatever was or wasn't said, Factory no longer controls who knows its roadmap. Nothing in the way the relationship was set up prevented that.

I expected the law to give founders some cover. It gives very little. The Justice Department's probe into Andreessen Horowitz rests on Section 8 of the Clayton Act, a 112-year-old ban on sitting on the boards of competing companies. Investigators are reportedly looking at Ben Horowitz's seat at Databricks and Martin Casado's at Fivetran. The rule covers only directors and board-appointed officers, and only companies that actually compete. It also applies only above certain financial thresholds. An adviser who attends board meetings without holding a seat appears to fall outside it. Regulators have rarely used it against venture firms. The best-known sweep, in October 2022, produced seven resignations from five public company boards.

Investor manners once did the job. In 2020 Sequoia walked away from its $21m investment in Finix because Finix competed with Stripe. It gave up its board seat, its information rights and its shares. In January 2026 the Financial Times reported that Sequoia would invest in Anthropic. Khosla backs both companies in this fight, and its own partners can't agree on the rules. Keith Rabois, a Khosla partner, argued on X that interviewing at a competitor while attending board meetings and dinners is unethical in itself. His founder was publicly attacking the startup Rabois was defending. When one fund takes both sides in public, I think founders should stop assuming anyone on their board is applying a shared standard.

The obvious reply is that a three-year-old startup cannot dictate terms to Khosla or Sequoia. On this view, a founder who demands exclusivity will watch the best money go to a rival. OpenAI could ask Thrive Capital and Tiger Global to stay out of five rivals in October 2024 because it was raising $6.6bn at a $157bn valuation. There is also a fair worry about the a16z probe. If regulators start forcing investors off boards, founders may trust board commitments from top firms less.

What I'd ask for is narrower than exclusivity, and it costs an investor almost nothing if they behave. The term sheet should name the competitors. Any partner, adviser or fund that invests in, interviews with or joins one of them must tell the founder within days. That notice should end their board, observer and information rights the same day, with no vote and no negotiation. Board packs should go to named people rather than to a fund. The Finix case shows information rights can be switched off cleanly while the startup keeps the money. A company taking $200m from Khosla, Blackstone, Sequoia and Insight has leverage at signing. After signing, its main recourse is a public fight on X like Grinberg's.

Tonight, list every fund, partner and adviser on your cap table that also holds a stake in a company you would call a competitor. Then pull the distribution list for your last board pack. Anyone who appears on both lists should stop receiving the deck this month. The clause belongs in your next term sheet, agreed before the wire arrives.

Prompted by Factory CEO just accused his VC board adviser of spying for Cognition | TechCrunch, TechCrunch.