- Factory raised $200 million at a $5 billion valuation, tripling its price in five months.
- Khosla Ventures, Blackstone and Sequoia Capital backed the round, joined by three angel investors.
- Its Droids agents write, test, review and deploy code, aiming to run engineering teams end to end.
Matan Grinberg was a physics PhD student at the University of California, Berkeley when a cold email to Sequoia Capital partner Shaun Maguire talked him into leaving academia for AI coding.
Three years later, his startup, Factory, has raised $200 million at a $5 billion valuation, more than tripling the $1.5 billion price tag it carried five months ago.
Khosla Ventures, Blackstone and Sequoia Capital backed the round, according to The Wall Street Journal. Salesforce chief executive Marc Benioff, Altimeter Capital founder Brad Gerstner and former Formula One champion turned green-tech investor Nico Rosberg joined as angels.
“Across the world’s largest enterprises, we are seeing a move from individual coding agents to software factories that serve as the core foundation from which an entire software company operates,” said Grinberg, Factory’s co-founder and chief executive.
A $5B jump, three times over
Founded in 2023 by Grinberg and Eno Reyes, Factory builds Droids: AI agents that write, test, review, document and deploy code across enterprise engineering teams, rather than suggesting the next line in an editor. Its customers include Nvidia, Adobe, Morgan Stanley, Royal Bank of Canada, Palo Alto Networks and Ernst & Young.
The agents are model-agnostic, switching between providers such as Anthropic’s Claude and DeepSeek depending on the task, a design Factory has pitched as insurance against relying on one AI lab, which it made central to its case when it last raised.
Factory’s climb has come in three jumps, not two: a $150 million Series C in April took it to $1.5 billion, a $120 million extension in July pushed that to $4 billion, and now $200 million lifts it to $5 billion. The new round brings Factory’s total funding to more than $400 million.
The AI coding gold rush
Factory is entering a market where valuations have exploded. Cognition, the maker of Devin, raised over $2 billion at a $48 billion valuation in September, nearly doubling its price in four months. Cursor took a different exit entirely: SpaceX bought its parent company, Anysphere, for $60 billion after Cursor passed $2 billion in annual recurring revenue. Elsewhere in the stack, CodeRabbit raised $143 million at a $1.5 billion valuation in August, moving from code review into governing AI-written code.
The AI code tools market was worth $4.9 billion in 2023 and is projected to reach $26 billion by 2030, growing at a 27.1% annual rate, according to Grand View Research. Factory is betting that most of that growth goes to platforms running whole engineering workflows rather than assisting one developer at a time.
Three companies in this space have each been valued north of a billion dollars within the past year, and one already got bought outright. The open question is whether the market has room for Factory, Cognition and Cursor’s new owner to all chase the same enterprise customers, or whether this ends the way Cursor’s story just did.
