Venture funds have long followed an unwritten rule: do not back two companies fighting for the same customer. At TechCrunch Disrupt, partners from Benchmark admitted that the AI boom is wearing that agreement down.
Where the strain comes from
OpenAI and Anthropic share dozens of the same investors. In late September, the startup Factory fired adviser and board observer Chris Degnan for "unethical conduct involving Cognition", a direct competitor. Factory's CEO said Degnan discussed a job at Cognition while he could see board-level conversations. Degnan says he had already resigned, shared nothing confidential, and announced he was joining Cognition as chief revenue officer. Vinod Khosla, whose firm backs both companies, publicly took his side.
What Benchmark's partners said
Eric Vishria: companies pivot fast, so conflicts are bound to happen. The firm keeps whatever it learns confidential and stays committed to each founder. Chetan Puttagunta: when the cost of building software heads toward zero, founders reach for bigger territory and bump into each other more often. Peter Fenton called it the firm's hardest problem and said transparency is the golden rule: there should be no surprise after the fact.
What it means
Nobody is burying the rule, but the candor tells you where things are going: overlaps will keep happening. Founders would be wise to ask funds how they handle a conflict before the check is signed.