For decades, the unwritten rule of venture capital was that a firm doesn't back two companies that compete head-on. But speaking at TechCrunch Disrupt this week, the partners of Benchmark readily acknowledged that the AI boom is straining that rule.
The tension is already visible: the towering AI labs OpenAI and Anthropic share dozens of the same investors, and Khosla Ventures backs both Factory and Cognition, two direct rivals in AI coding agents. At the end of September, Factory fired its board adviser Chris Degnan over alleged misconduct involving Cognition, a dispute that put the industry's informal loyalty norms in the spotlight.
Benchmark's partners described the conflicts as a matter of necessity, not preference. "The harsh reality of this world is every company is evolving very quickly," said Eric Vishria. "You are going to get conflicts, and that's just the reality of the current dynamic."
Chetan Puttagunta said that as the cost of building software "effectively goes to zero," ambitious founders are claiming more surface area, and portfolio companies will increasingly run into each other. Peter Fenton called the issue "kryptonite" — the firm's toughest problem — but insisted on transparency: "There shouldn't be the surprise after the fact."
Benchmark isn't declaring the pact dead. But when a firm that built its name on founder loyalty says conflicts are coming, founders might rightly wonder who else will be this candid.