Factory Acquires Mentlio to Make Enterprise AI Spend More Efficient

What Factory is adding

According to Factory, Mentlio is building in-harness model routing and context compression to optimize cost and quality, along with measurement tools that show where AI usage creates value. Mentlio will bring this work into Factory's platform.

Factory says the goal is to bring efficient and intelligent autonomous software engineering to the largest enterprises in the world. The company announced the deal on October 9, 2026, in a post titled "Factory Acquires Mentlio: Building Intelligent Token Allocation for the Software Factory."

The problem: measuring and optimizing AI spend

Factory frames the acquisition around a challenge it says engineering leaders and CFOs share as enterprises deploy agents at scale across the software development lifecycle. They need to understand, measure and optimize their AI spend, and to allocate AI investment so that the return on spend is as high as possible.

In the company's words, the next frontier is building software factories that spend tokens where they pay off. Factory also says such systems should connect engineering adoption and effectiveness to growth, profitability and risk.

Factory says that after spending time with Mentlio's founders, Ashank Shah and Ahmet Demirbas, it became clear the two sides share the belief that autonomous software engineering will scale when the value it creates is measured.

The founders and the company

Shah and Demirbas met while studying computer science at Caltech and working part-time at startups. Together they won 1st place at NexHacks at CMU with a token compression algorithm that later inspired Mentlio.

• Shah previously researched generative AI and graph deep learning for biomedical problems at Dartmouth and Purdue, and won internationally at the International Science and Engineering Fair and the Junior Science and Humanities Symposium.
• Demirbas published research in NLP and AI in IEEE, BMC AI and ACM, won nationally at the USA AI Olympiad and the International Science and Engineering Fair, and was named a Top 300 Science Scholar by Regeneron.

Factory was founded in 2023 by Matan Grinberg and Eno Reyes and is headquartered in San Francisco. It describes its product as a governed, model-independent system that turns business priorities and engineering signals into production software. Its Droids plan, build, validate and improve work inside each company's infrastructure, policies and approved models.

What it means for enterprise customers

The announcement does not give financial terms, a product timeline or details on how Mentlio's tools will be packaged. What it does make clear is the direction: Factory wants cost control and value measurement to be part of its autonomous engineering platform, not a separate concern.

For large organizations running agents across their software lifecycle, that points to tooling meant to show where tokens are spent and whether that spending pays off. Factory also says every workstream on its platform learns from measured results, which fits the emphasis on measurement that Mentlio brings.