The investment firm Andreessen Horowitz is moving its incorporation out of the First State, and urging others to follow, as backlash to its courts grows.
Andrew here. Andreessen Horowitz just announced plans to move from Delaware and reincorporate in Nevada, following similar moves out of the state by companies including Dropbox, Tesla and TripAdvisor. It could be a watershed moment: One of the most influential firms in Silicon Valley is openly telling its young portfolio companies to consider moving, too.
This isn’t just about a few big names. It’s a signal to the entire tech ecosystem that the “Delaware default” might be coming to an end. We dive into that below, along with Linda Yaccarino’s exit from X, big news in noncompete agreements and more.
A loud new cheerleader for ‘Dexit’
For more than a year, Delaware has battled against what legal observers have nicknamed Dexit: companies leaving the First State, the legal home for most of corporate America, over concerns that it has become hostile to big business.
Elon Musk has been among the most prominent proponents of the movement. But Andreessen Horowitz, an influential venture capital firm, may have just become the most consequential.
What’s happening: Andreessen Horowitz is moving the incorporation of its primary business, AH Capital Management, to Nevada, three executives of the venture firm wrote in a blog post on Wednesday. The firm — known in Silicon Valley as A16Z — has been incorporated in Delaware since its founding in 2009.
In the post, the executives wrote that what once was a no-brainer — incorporating in Delaware — was “no longer the case.” A state court system that had clear laws that afforded founders and their boards sensible leeway to run their businesses now has an “unprecedented level of subjectivity” that leaves companies vulnerable to expensive shareholder litigation, they argued.
