Benchmark Acknowledges AI is Straining Venture Capital's Non-Backing Rivals Pact
For decades, venture capital firms have adhered to an unwritten rule against backing direct competitors. However, Benchmark partners recently admitted at TechCrunch Disrupt that the rapid evolution of artificial intelligence has strained this norm. As more startups pivot into overlapping markets and AI lowers barriers to entry in software development, conflicts are becoming inevitable. The issue came to a head with Factory's decision to fire board observer Chris Degnan for alleged unethical behavior involving Cognition, its direct rival. Degnan denied wrongdoing before joining Cognition as chief revenue officer. Khosla Ventures, which backs both companies, supported him publicly. Benchmark partners acknowledged the growing complexity but emphasized their commitment to transparency and founder loyalty. Eric Vishria noted that exclusivity remains important at early stages, while Chetan Puttagunta attributed increased conflicts to AI's role in lowering startup costs and enabling ambitious expansion into overlapping markets.
Topics: AI Startups Boardroom Disputes Corporate Conflicts Venture Capital