Andreessen Horowitz is Leaving Delaware for Nevada

Andreessen Horowitz opts for laxity rather than accountability in its governing corporate law

Andreessen Horowitz today announced that it was moving its state of incorporation from Delaware to Nevada. Adding injury to insult, it urged other companies to do likewise and for new startups to choose Nevada rather than Delaware.

The phenomenon is known as DExit (a play on Brexit): a company incorporated in Delaware reincorporates in Nevada. Making that move can have a number of consequences, the most important of which follows from a conflict of laws rule known as the internal affairs doctrine. That doctrine says that the law of the state in which a company is incorporated governs the company’s internal affairs. So if a shareholder of a company incorporated in Delaware wants to sue the board of directors for breachings its fiduciary duties, for example, Delaware law will govern the lawsuit no matter where the suit is filed.

It’s a surprising decision. Historically, venture capitalists preferred that their portfolio companies incorporate in Delaware:

1. “Often it’s venture capital firms and other investors who push for Delaware incorporation, identifying the state as the ‘undisputed preeminent jurisdiction for corporate matters ….’” (Bloomberg 4/2/24)

2. “Founders of investor-funded emerging companies should know that the investors prefer Delaware by a long shot.” (DLA Piper 7/24/17)

3. “Delaware remains a favorite among investors and venture capital firms.” (5/13/25)

A 2014 study of venture-capitalist-backed start-ups concluded that home state investors were relatively indifferent between incorporation in Delaware and their home-state, while out-of-state investors tended to prefer Delaware incorporation.¹

Professor Anat Alon-Beck’s 2024 study of the incorporation choices of unicorns (defined as private companies with a valuation exceeding $1 billion) also supports Delaware’s dominance as the state of incorporation of choice for start-ups. Only 5 out of 220 unicorns in her dataset incorporated in a state other than Delaware. She found that 97% of unicorns choose Delaware compared to 79% of public corporations, 67% of early-stage venture capital corporations, and 2% of small private enterprises incorporated in Delaware. She attributes Delaware’s dominance of the competition for unicorn charters to the high percentage of sophisticated investors among unicorn shareholders, arguing that such investors prefer Delaware law, which they perceive as protecting investor interests—“i.e., being friendly to shareholders rather than management,”which is consistent with the evidence recounted above regarding investor preferences.²

In bucking that history, Andreessen Horowitz advanced a number of explanations for its decision. None hold up on close examination.