The AI gold rush is reshaping the venture capital landscape, forcing a shift away from traditional exclusivity.
Firms are increasingly funding competing startups, leading to public disputes and internal conflicts of interest.
Learn how this evolution in investor strategy is affecting the relationship between venture firms and founders, and why transparency has become the primary tool for managing these blurred competitive lines.
The challenge of artificial intelligence
At the TechCrunch Disrupt conference in October 2026, executives at investment firm Benchmark admitted that the old practice is no longer a guarantee. As new companies grow so quickly, they often change direction and end up competing with other businesses backed by the same investor. According to Benchmark, these conflicts of interest now arise out of necessity rather than choice, although the firm says it remains committed to confidentiality with the founders it backs.
The case of Factory and Cognition
The issue of trust has been highlighted by recent industry friction. Factory fired its consultant, Chris Degnan, accusing him of unethical behavior in favor of its competitor, Cognition. Degnan denied the insider trading allegations, saying he had already resigned from his position before the incident. He later took over as Cognition’s chief revenue officer.
The controversy escalated when investor Vinod Khosla, whose firm, Khosla Ventures, has invested in both companies, publicly came out in support of Degnan while criticizing Factory's stance.
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Despite the difficulties, Benchmark executives stressed that full transparency remains essential in order to avoid unpleasant surprises for founders. The market is changing speed and, with it, the balance between investors and entrepreneurs is being revised.
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