Partners at venture capital firm Benchmark have acknowledged that the AI boom is straining the unwritten rule that a firm does not back two companies competing head-on. Speaking at TechCrunch Disrupt earlier this week, they described the conflicts as a matter of necessity rather than preference.
Eric Vishria said every company is evolving very quickly, and that pivots and changes mean conflicts will arise. He said Benchmark remains committed to each founder and keeps what it learns confidential, adding that exclusivity remains really important at the very early stage the firm favours, but that things are evolving.
Chetan Puttagunta said AI is accelerating the problem. As the cost of building software effectively goes to zero, he said, founders are incredibly ambitious and want to claim a wider surface area, making it more likely they will run into each other. He distinguished between a direct competitor at the outset, which he called an easy answer, and a portfolio company that expands into another's turf over time.
Peter Fenton called the issue kryptonite and the firm's toughest problem. He described a spectrum of investor relationships, from co-founder to public-market stock picker, and said Benchmark sits nearer the co-founder end and treats transparency as a golden rule. If a conflict emerges, he added, a founder should never feel shortchanged.
The discussion follows a dispute at the end of September in which Factory, a startup building an AI agent to write software, said it was firing board observer and adviser Chris Degnan for unethical conduct involving Cognition, its direct rival. Factory's CEO alleged Degnan had discussed a job at Cognition while privy to Factory's board-level discussions. Degnan said he had already resigned and denied sharing anything confidential, and soon after announced he was joining Cognition as chief revenue officer. Vinod Khosla sided with Degnan on X, and Khosla Ventures backs both companies.
Benchmark is not declaring the pact dead, but its partners said conflicts are coming.