{"id":3492097,"date":"2026-10-16T05:16:46","date_gmt":"2026-10-16T05:16:46","guid":{"rendered":"https:\/\/techingeek.com\/index.php\/2026\/10\/16\/even-benchmark-thinks-ai-is-eroding-the-venture-pact-against-backing-rivals\/"},"modified":"2026-10-16T05:16:46","modified_gmt":"2026-10-16T05:16:46","slug":"even-benchmark-thinks-ai-is-eroding-the-venture-pact-against-backing-rivals","status":"publish","type":"post","link":"https:\/\/techingeek.com\/index.php\/2026\/10\/16\/even-benchmark-thinks-ai-is-eroding-the-venture-pact-against-backing-rivals\/","title":{"rendered":"Even Benchmark thinks AI is eroding the venture pact against backing rivals"},"content":{"rendered":"
<\/div>\n
\n

For decades, the unwritten rule of venture capital was that a firm doesn\u2019t back two companies that compete head-on. But speaking at TechCrunch Disrupt earlier this week, the partners of Benchmark readily acknowledged that the AI boom is straining that rule.<\/p>\n

It\u2019s been on the verge of snapping for some time. The towering AI labs OpenAI and Anthropic share dozens of the same investors at this point. Then, at the end of September, Factory, a startup that builds an AI agent to write software, said it was firing board observer and adviser Chris Degnan for \u201cunethical conduct involving Cognition,\u201d its direct rival and the maker of the Devin coding agent. Factory\u2019s CEO alleged Degnan had discussed a job at Cognition while privy to Factory\u2019s board-level discussions. Degnan said he had already resigned and denied sharing anything confidential. Soon after, he announced he was joining Cognition as chief revenue officer. Powerhouse investor Vinod Khosla sided with Degnan on X, blasting Factory\u2019s CEO and calling the company \u201ca struggling second tier competitor.\u201d Khosla Ventures backs both companies.<\/p>\n

Even Benchmark, a firm whose reputation rests on 10-to-15-year partnerships with founders at the earliest stage, said the old rule can no longer be counted on. Asked at Disrupt whether the pact against backing rivals still holds as portfolio companies expand into each other\u2019s territory, its partners described the conflicts as a matter of necessity, not preference.<\/p>\n

\u201cThe harsh reality of this world is every company is evolving very quickly,\u201d said Eric Vishria. Companies pivot and change, he said, and \u201cyou are going to get conflicts, and that\u2019s just the reality of the current dynamic.\u201d<\/p>\n

Vishria said Benchmark stays committed to each founder and keeps what it learns confidential, and he downplayed how much a VC could pass along anyway: \u201cWe are not product or technology experts.\u201d Seemingly referring to the Factory-Cognition dispute, he said Benchmark has been fortunate not to land in \u201cthat type of insane direct conflict.\u201d Exclusivity, he said, remains \u201creally important\u201d at the very early stage Benchmark favors. \u201cBut things are evolving. There\u2019s no doubt about that.\u201d<\/p>\n

Chetan Puttagunta said AI is accelerating the problem. As the cost of building software \u201ceffectively goes to zero,\u201d he said, founders are \u201cincredibly ambitious.\u201d Because they now see a \u201csurface area\u201d and want to claim all of it, he continued, \u201c[i]t\u2019s probably going to happen more, where you start to run into each other.\u201d<\/p>\n

He drew a line between a direct competitor at the outset, which he called \u201can easy answer,\u201d and a portfolio company that expands into another\u2019s turf over time. \u201cThat happens,\u201d he said.<\/p>\n

Peter Fenton called the issue \u201ckryptonite\u201d and the firm\u2019s toughest problem. He described a spectrum of how investors relate to their companies. At one end is the co-founder, who would never work on a competing company. At the other is the public-market stock picker, who can own several rivals because he is merely allocating capital, not shaping any of them. Benchmark sits nearer the co-founder end, Fenton said, and treats transparency as a golden rule. \u201cThere shouldn\u2019t be the surprise after the fact.\u201d If a conflict does emerge, a founder should never feel shortchanged, he added.<\/p>\n

Benchmark isn\u2019t declaring the pact dead. At the same time, when a firm that built its name on loyalty says conflicts are coming, founders might rightly wonder who else will be this candid.<\/p>\n<\/div>\n

When you purchase through links in our articles, we may earn a small commission. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

<\/div>\n
\n

For decades, the unwritten rule of venture capital was that a firm doesn\u2019t back two companies that compete head-on. But speaking at TechCrunch Disrupt earlier this week, the partners of Benchmark readily acknowledged that the AI boom is straining that rule.<\/p>\n

It\u2019s been on the verge of snapping for some time. The towering AI labs OpenAI and Anthropic share dozens of the same investors at this point. Then, at the end of September, Factory, a startup that builds an AI agent to write software, said it was firing board observer and adviser Chris Degnan for \u201cunethical conduct involving Cognition,\u201d its direct rival and the maker of the Devin coding agent. Factory\u2019s CEO alleged Degnan had discussed a job at Cognition while privy to Factory\u2019s board-level discussions. Degnan said he had already resigned and denied sharing anything confidential. Soon after, he announced he was joining Cognition as chief revenue officer. Powerhouse investor Vinod Khosla sided with Degnan on X, blasting Factory\u2019s CEO and calling the company \u201ca struggling second tier competitor.\u201d Khosla Ventures backs both companies.<\/p>\n

Even Benchmark, a firm whose reputation rests on 10-to-15-year partnerships with founders at the earliest stage, said the old rule can no longer be counted on. Asked at Disrupt whether the pact against backing rivals still holds as portfolio companies expand into each other\u2019s territory, its partners described the conflicts as a matter of necessity, not preference.<\/p>\n

\u201cThe harsh reality of this world is every company is evolving very quickly,\u201d said Eric Vishria. Companies pivot and change, he said, and \u201cyou are going to get conflicts, and that\u2019s just the reality of the current dynamic.\u201d<\/p>\n

Vishria said Benchmark stays committed to each founder and keeps what it learns confidential, and he downplayed how much a VC could pass along anyway: \u201cWe are not product or technology experts.\u201d Seemingly referring to the Factory-Cognition dispute, he said Benchmark has been fortunate not to land in \u201cthat type of insane direct conflict.\u201d Exclusivity, he said, remains \u201creally important\u201d at the very early stage Benchmark favors. \u201cBut things are evolving. There\u2019s no doubt about that.\u201d<\/p>\n

Chetan Puttagunta said AI is accelerating the problem. As the cost of building software \u201ceffectively goes to zero,\u201d he said, founders are \u201cincredibly ambitious.\u201d Because they now see a \u201csurface area\u201d and want to claim all of it, he continued, \u201c[i]t\u2019s probably going to happen more, where you start to run into each other.\u201d<\/p>\n

He drew a line between a direct competitor at the outset, which he called \u201can easy answer,\u201d and a portfolio company that expands into another\u2019s turf over time. \u201cThat happens,\u201d he said.<\/p>\n

Peter Fenton called the issue \u201ckryptonite\u201d and the firm\u2019s toughest problem. He described a spectrum of how investors relate to their companies. At one end is the co-founder, who would never work on a competing company. At the other is the public-market stock picker, who can own several rivals because he is merely allocating capital, not shaping any of them. Benchmark sits nearer the co-founder end, Fenton said, and treats transparency as a golden rule. \u201cThere shouldn\u2019t be the surprise after the fact.\u201d If a conflict does emerge, a founder should never feel shortchanged, he added.<\/p>\n

Benchmark isn\u2019t declaring the pact dead. At the same time, when a firm that built its name on loyalty says conflicts are coming, founders might rightly wonder who else will be this candid.<\/p>\n<\/div>\n

When you purchase through links in our articles, we may earn a small commission. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n","protected":false},"author":2,"featured_media":3492098,"comment_status":"open","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3492097","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/posts\/3492097"}],"collection":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/comments?post=3492097"}],"version-history":[{"count":0,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/posts\/3492097\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/media\/3492098"}],"wp:attachment":[{"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/media?parent=3492097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/categories?post=3492097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/techingeek.com\/index.php\/wp-json\/wp\/v2\/tags?post=3492097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}