Factory, a startup developing autonomous AI coding agents called Droids, is in discussions to raise $150 million at a $1.5 billion valuation. The funding round will be led by Khosla Ventures, with venture capitalist Keith Rabois joining the board. Other investors include Sequoia Capital, Insight Partners, and Blackstone. Factory’s technology allows its Droids to switch between AI models such as OpenAI’s GPT, Anthropic’s Claude, and China’s DeepSeek, depending on task complexity and customer needs.

The company’s flexibility has attracted enterprise clients including Morgan Stanley, Ernst & Young, and Palo Alto Networks. Factory’s CEO and co-founder, Matan Grinberg, said the ability to dynamically route between models has proven valuable, especially during outages at Anthropic. The startup positions itself as an enterprise-focused AI agent developer, contrasting with competitors like Cursor, which targets individual developers.

Grinberg, who left his PhD program at the University of California, Berkeley after being encouraged by Sequoia investor Shaun Maguire, founded Factory in 2023. The company now competes with Cursor, Cognition, and major AI labs developing their own coding tools.