Factory raises $150 million from Khosla Ventures at a $1.5 billion valuation

Three-year-old startup Factory has closed a $150 million funding round led by Khosla Ventures, giving it a valuation of $1.5 billion. It is one of the largest rounds in the AI developer-tools segment in recent months, and further evidence that investors see software-development automation as the key bet of the decade.

Factory is building a platform for autonomous AI programming, aimed at enterprise customers. The product is not just a code-autocomplete assistant, but a set of full agents that can carry out engineering tasks on their own: write code, run tests, find bugs and plug into existing development workflows. The target audience is large technology companies and enterprises with big engineering teams, which need automation not of individual lines of code but of entire tasks.

The market Factory operates in is growing explosively. By various estimates, the AI developer-tools segment may exceed $30 billion by 2030. Companies such as Microsoft (through GitHub Copilot), Google (with Gemini Code Assist) and Anthropic have already placed significant bets in this area. Factory competes in a niche that also includes Cursor, Cognition with its Devin agent, and several other well-funded startups.

What sets Factory apart in this market is its enterprise focus. Enterprise customers have specific requirements: compliance with internal security standards, integration with legacy systems, audit logs and support for private clouds. This makes sales longer and more complex, but it also brings a higher contract value and lower customer churn. Factory is building exactly that model, with long-term relationships with large customers.

Khosla Ventures is no accidental choice as lead investor. The fund made early bets on OpenAI, Mistral and a number of other key AI companies. Khosla's participation gives Factory not only capital but also strategic credibility in conversations with large enterprise clients.

The $150 million will go toward growing the engineering team, expanding the enterprise sales department and developing infrastructure for handling customer data.

A $1.5 billion valuation after three years is a signal to the market: investors see Factory as a potential segment leader, not just another developer tool.

For the market as a whole, the round supports a thesis: automating software development is one of the most valuable applications of modern AI. Programming remains a field where mistakes are expensive, speed is critical and skilled specialists are scarce. This is where AI agents can deliver the largest measurable ROI, and this is where venture capital is now concentrating.