Matan Grinberg, the CEO of AI coding startup Factory, has publicly accused one of his own board advisers of passing confidential information to a rival. The adviser, venture investor Chris Degnan, announced on the same day that he is joining that rival, Cognition, as chief revenue officer. At the time of reporting, Degnan, his firm and Factory had not responded to requests for comment.
Treat these as allegations, not proven facts. Still, every founder who has handed someone a seat near the table should read this story twice. Your board and your advisers know your roadmap, your pricing and your weak spots.
What the Dispute Is About
Degnan is a former Snowflake chief revenue officer. He spent five months as an investor partner at RPT Partners, and he advised Factory’s board during that stretch. Grinberg says Degnan described his talks with Cognition as casual while attending Factory meetings, and that the conversations were in fact ongoing.
The money involved explains why the stakes feel so high. Both companies closed large rounds in September, and they compete for the same customers and the same talent. The table shows how far apart they sit.
| Company | Recent raise | Valuation |
|---|---|---|
| Factory (three years old, San Francisco) | $200 million, September 2026 | $5 billion |
| Cognition | $2 billion, earlier in September 2026 | $48 billion |
Those numbers show a wide gap in scale, which sharpens the competitive angle. A larger rival with more cash can hire faster and sell harder, so inside knowledge of a smaller company’s plans could be valuable. That is exactly the situation governance rules exist to prevent.
Why Board of Advisors Access Is a Real Risk
Many first-time founders treat advisers like a free lunch. They sit in a few meetings, share contacts and make you feel smarter. Few stop to think about what those advisers can see, or who else they might talk to.
A board of advisors works best when everyone shares one loyalty, which is your company. Once an adviser has a competing interest, even a perfectly honest one, the information flow becomes a liability. That is true whether or not any bad intent exists.
Advisers also wear several hats. One person may invest, advise and sit on other boards in the same month. As a result, a harmless dinner conversation can become a leak without anyone noticing.
Four Moves to Protect Your Company This Week
You do not need a lawyer on retainer to tighten this up. You need a few habits that you actually follow. Start here:
- Put every adviser under a written agreement that covers confidentiality and conflicts of interest.
- Require advisers to disclose any talks with a competitor, customer or acquirer before they happen.
- Share sensitive material on a need-to-know basis, and keep pricing and product plans out of casual updates.
- Keep a short record of who received which information, so you can trace a leak quickly.
Each of these steps is cheap and fast. Together, they turn a vague sense of trust into something you can point to if a problem comes up. They also set expectations on day one, which is the easiest time to have an awkward conversation.
The National Venture Capital Association publishes model legal documents that show how investors and companies commonly structure these protections. Use them as a starting point, and then have your own counsel adapt them.
Where Fundraising Strategy Meets Governance
Big rounds invite big relationships. After a major raise, such as the ones behind our series A funding lessons, you suddenly have more investors, more advisers and more people who want your attention. Each one is a potential path for information to leave the building.
So build governance before you need it. It is far easier to set the rules when everyone is friendly than to argue about them in public. In addition, clear rules protect good advisers, who deserve a straightforward way to say yes or no to opportunities.
What Good Advisers Still Bring
None of this means you should avoid advisers. The right ones open doors, sharpen your thinking and save you months of mistakes. The goal is to keep those benefits while limiting the risks.
A useful test is to ask what an adviser would lose if they broke your trust. If the honest answer is very little, add more guardrails.
What to Watch as This Plays Out
Pay attention to whether Degnan or RPT Partners responds, and what their account says. Watch also for any legal filing, since public allegations like these sometimes move into court. Meanwhile, expect other startup leaders, especially those chasing AI startup funding, to quietly review who sits in their advisory circles.
The lesson is bigger than one dispute. Trust is a business asset, and you protect it with structure, not hope. Check your adviser agreements today, and get started before you have a reason to.
