For decades, venture capital operated on an unwritten rule: a firm doesn't back two companies that compete directly. But speaking at TechCrunch Disrupt, Benchmark's partners acknowledged that the AI boom is straining that pact. They described conflicts as a matter of necessity, not preference, given how quickly AI startups pivot and expand their ambitions.
A recent dispute between Factory and Cognition, two AI coding-agent startups that share investors, illustrates the tension. Factory fired an adviser who later joined rival Cognition, and the episode drew public criticism from investor Vinod Khosla, whose firm backs both companies. Benchmark's partners said they've been fortunate to avoid such "insane direct conflict," but they expect more collisions as founders claim ever-wider "surface areas."
Benchmark isn't declaring the pact dead. Partners stressed that exclusivity remains "really important" at the early stage they favor, and they still treat transparency as a golden rule. But they also admitted that the old model is evolving, and that founders should expect conflicts to arise more often in an AI-driven world where software costs are plummeting and ambitions are soaring.