More than three years after the emergence of generative AI, AI-assisted coding remains the most popular and lucrative use case for the technology.

Despite numerous competitors such as Anthropic, Cursor and Cognition, investors believe there is room for at least one more player. On Wednesday, Factory, a startup developing AI agents for enterprise engineering teams, announced it had raised $150 million at a $1.5 billion valuation. The round was led by Khosla Ventures with participation from Sequoia Capital, Insight Partners and Blackstone.

Factory’s customers include engineering teams at Morgan Stanley, Ernst & Young, and Palo Alto Networks. Founded in 2023 after its founder Matan Grinberg cold-emailed Sequoia partner Shaun Maguire while a PhD student at UC Berkeley, the startup was given a significant boost by early backing from Sequoia.

Founder Matan Grinberg told the Wall Street Journal that Factory’s key differentiator is its ability to switch between different foundation models such as Anthropic's Claude or Chinese AI startup DeepSeek. However, startups like Cursor also don’t rely on a single model to generate code.