# Benchmark Says AI Growth Is Straining Venture Firms' Exclusivity Rules

By John Kim

Canonical URL: https://www.tokenpost.com/news/business/33270
Published: 2026-10-16T12:57:43.000Z
Updated: 2026-10-16T12:57:43.000Z
Section: Business

> Partner Chetan Puttagunta expects startup overlap to increase as software becomes cheaper to build. Benchmark says exclusivity matters most at a company’s earliest stage.

Benchmark partners said AI-driven changes to startup plans are making it harder for venture firms to avoid backing companies that eventually compete, testing an unwritten expectation of exclusivity.

At a conference this week, Benchmark partner Eric Vishria described portfolio conflicts as a consequence of fast-moving companies. Startups can change direction and enter markets served by another company backed by the same investor, he said. Vishria said Benchmark remains committed to its founders and keeps information learned through those relationships confidential.

Vishria said exclusivity matters most at the earliest stage, when Benchmark typically invests. But that boundary can become harder to maintain as a company changes its product or strategy. Benchmark has built 10- to 15-year relationships with founders, beginning at an early stage.

Benchmark partner Chetan Puttagunta linked the risk to the falling cost of software development. As software becomes far less expensive to build, he said, founders are ambitious and want to pursue more of an opportunity. Puttagunta expects companies to run into one another more often. He distinguished startups that compete from the outset from portfolio companies that move into another company’s market as they expand.

Benchmark partner Peter Fenton called conflicts the firm’s toughest problem. He described a range of investor relationships: At one end, an investor acts much like a co-founder and would not build a rival; at the other, a public-market investor may hold competing stocks without shaping the businesses. Benchmark sits closer to the founder end of that range, Fenton said, and relies on transparency. Founders should not be surprised by a conflict after it emerges or feel disadvantaged if one develops, he said.

AI companies already have investors in common: OpenAI and Anthropic share dozens. A dispute involving Factory and Cognition also illustrates the tensions. In late September, Factory said it was firing board observer and adviser Chris Degnan over alleged misconduct involving Cognition, a direct competitor. Factory’s CEO alleged that Degnan discussed a job at Cognition while he had access to Factory board discussions. Degnan said he had already resigned and denied sharing confidential information. He later joined Cognition as chief revenue officer. Khosla Ventures backs both startups.

Benchmark still considers exclusivity important at the earliest stage, while its partners say the old expectation is harder to rely on as companies grow and their markets shift.