Factory Raises $150 Million at $1.5 Billion Valuation for AI Coding Agents

Factory, an artificial intelligence startup developing autonomous coding agents for enterprises, has raised $150 million at a $1.5 billion valuation, according to the Wall Street Journal. The funding round was led by Khosla Ventures, with participation from Sequoia Capital, Insight Partners, and Blackstone. Keith Rabois of Khosla Ventures will join the company’s board.

Factory’s AI agents, called Droids, can dynamically switch between different foundation models such as OpenAI’s GPT, Anthropic’s Claude, and China’s DeepSeek, depending on task complexity and customer requirements. This flexibility has been cited as a key advantage, particularly during outages affecting major AI providers.

The company’s clients include enterprise teams at Morgan Stanley, Ernst & Young, and Palo Alto Networks. Factory was founded in 2023 by Matan Grinberg, who left his PhD program at the University of California, Berkeley, after being encouraged by Sequoia partner Shaun Maguire to start the company.

Factory competes in the growing AI coding market alongside startups such as Cursor and Cognition, as well as established AI labs developing their own coding tools.