For decades, venture capital ran on an unwritten rule: a firm does not back two companies that compete head-on. Speaking at TechCrunch Disrupt this week, partners at Benchmark - a firm whose reputation rests on long, early partnerships with founders - readily acknowledged that the artificial intelligence boom is straining that pact.
The pressure is visible across the industry. The leading AI labs OpenAI and Anthropic now share dozens of the same investors. In late September, Factory, a startup building an AI agent that writes software, said it was firing a board observer over alleged dealings with its direct rival Cognition, maker of the Devin coding agent; the executive denied sharing anything confidential and soon joined Cognition, while a prominent investor backing both companies publicly sided with him.
Benchmark partner Eric Vishria told the Disrupt audience that companies now pivot and expand so quickly that conflicts arise whether investors seek them or not, describing the new reality as necessity rather than preference.
For founders, the shift changes the diligence questions that matter: not just whether a firm backs a rival today, but how it will behave when portfolio companies inevitably collide in the AI market.
