Menlo Ventures announced on October 5 that it has joined Factory's latest funding round, led by partner Matt Murphy. The company did not disclose the specific amount, but sources say this investment is not merely symbolic for Menlo, and they may increase their stake if there is room in the equity table.

Factory aims to expand software development from code completion to a full factory process. The platform covers planning, code review, testing, security, documentation, and collaboration, executing multi-step engineering tasks with agents called Droids. Menlo states that the coding market has grown from $550 million to over $30 billion in two years, accounting for nearly half of AI application spending, but most of the money remains at the code generation stage.

Factory claims to have served hundreds of thousands of developers, with clients including NVIDIA, Blackstone, Palo Alto Networks, Adyen, and EY. The system is designed to be model-agnostic, allowing clients to choose their models and deploy them sovereignly within their own security and infrastructure. The company has expanded its offices to San Francisco, New York, London, and Japan.

Founder and CEO Matan Grinberg dropped out of the theoretical physics PhD program at UC Berkeley to start the company, while co-founder and CTO Eno Reyes previously worked as a machine learning engineer at Hugging Face. Grinberg welcomed Murphy's involvement, stating that engineers will shift from personally writing software to building factories for software production.

This investment follows last month's announcement of a $200 million funding round, which valued the company at $5 billion. Menlo's portfolio page marks this collaboration as part of the 2026 Series D. Murphy previously led Menlo's early investment in Anthropic, and the portfolio also includes Lovable, OpenRouter, and Harness.

The buyer is a late-stage fund filling a gap, while the seller is equity freed up after a closed round. The transaction was driven by public disputes between Factory and Cognition, rather than a new pricing round. The funds will be used for full-process agent R&D, benefiting both Factory and Menlo from enterprise orders and portfolio synergies. Tools that only do code completion, as well as competing products without this relationship with Menlo, are under pressure regarding delivery and governance quotas.

TechCrunch reported that Grinberg publicly stated last week that he had fired advisor Chris Degnan due to concerns about confidential information flowing to competitor Cognition. Degnan claimed he resigned and rejected Grinberg's non-compete invitation. Menlo is not an investor in Cognition.

Source: Public Information