Factory raises $150M as AI coding agents chase enterprise budgets

Factory has raised a $150 million Series C at a $1.5 billion valuation, according to TechCrunch, putting another well-funded AI coding company directly in the path of enterprise software spending. Khosla Ventures led the round, with participation from Sequoia Capital, Insight Partners and Blackstone. Keith Rabois is joining the board.

The company is selling AI agents for software engineering teams rather than a single autocomplete layer. That matters because the competitive center of coding AI is moving beyond individual developer productivity into workflow ownership: ticket triage, code generation, review, testing and integration with large-company systems. Factory says customers include Morgan Stanley, EY and Palo Alto Networks, names that suggest the category is being evaluated by regulated and security-conscious buyers, not only startups.

The size of the round also clarifies how expensive this market is becoming. Factory is competing with products and companies such as Claude Code, Cursor, Cognition and GitHub Copilot, all of which are trying to become the default interface between engineers and codebases. In that fight, distribution, enterprise procurement, model costs and trust controls may matter as much as raw benchmark performance.

For CIOs and engineering leaders, the sharper question is no longer whether AI can write useful code. It is which vendor can prove that agentic coding reduces cycle time without creating review debt, security exposure or fragmented developer workflows. Factory now has the capital to chase that proof inside large accounts, and the rest of the coding AI market has another signal that enterprise budgets are the main battleground.