Factory raises $200M at $5B valuation to build AI-powered software development platform

San Francisco-based startup Factory announced a $200 million funding round on September 15, 2026, pushing its valuation to $5 billion — more than triple its $1.5 billion valuation from April 2026. The round was backed by major investors including Blackstone, Sequoia Capital, Khosla Ventures, and Insight Partners, bringing total funding raised to over $400 million. Unlike companies selling AI models, Factory offers a system designed to automate the entire software development lifecycle, from interpreting bug reports and feature requests to writing, testing, and monitoring code. The platform uses multiple AI agents working in parallel, with built-in tools like Droid Shield 2.0 to detect security vulnerabilities in AI-generated code. Factory positions its approach as a continuous feedback loop where deployed software generates new signals that feed back into the development cycle, with minimal human intervention.
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