Benchmark Partners Say AI Boom Is Breaking VC Rule Against Backing Rivals

At TechCrunch Disrupt in October 2026, partners of Benchmark acknowledged that the AI boom is straining a long-standing unwritten rule of venture capital: not backing two companies that compete head-on. With portfolio companies expanding into each other's territory, they said conflicts are becoming unavoidable.

Partner Eric Vishria said the reality is that every company is evolving very quickly, and as companies pivot and change, "you are going to get conflicts." He said Benchmark remains committed to each founder and keeps what it learns confidential, downplaying how much a VC could pass along: "We are not product or technology experts." Appearing to reference the recent dispute between Factory and Cognition, he said Benchmark has been fortunate not to land in "that type of insane direct conflict." Exclusivity, he said, remains "really important" at the early stage Benchmark favors, "but things are evolving."

Partner Chetan Puttagunta said AI is accelerating the problem. As the cost of building software "effectively goes to zero," founders are "incredibly ambitious" and see a wider "surface area" to claim, so collisions are likely to happen more often. He drew a line between a direct competitor at the outset and a portfolio company that expands into another's turf over time. "That happens," he said.

Partner Peter Fenton called the issue "kryptonite" and the firm's toughest problem. He described a spectrum from co-founders who would never work on a competing company to public-market stock pickers who can own several rivals because they are merely allocating capital. Benchmark sits nearer the co-founder end, he said, and treats transparency as a golden rule: "There shouldn't be the surprise after the fact." If a conflict emerges, founders should never feel shortchanged.

Benchmark is not declaring the pact dead. Still, when a firm that built its name on loyalty says conflicts are coming, founders might rightly wonder who else will be this candid.