DOJ Probes Andreessen Horowitz Over Board Seats
The DOJ is investigating Andreessen Horowitz over its partners holding board seats at competing startups Databricks and Fivetran.
Stock photo for illustration only, not from the actual event
- The US DOJ is probing venture capital firm Andreessen Horowitz for nearly a year.
- The investigation focuses on partners serving on competing startup boards.
- Databricks and Fivetran became competitors years after initial investments.
- The probe invokes Section 8 of the 112-year-old Clayton Act.
The U.S. Department of Justice has launched an investigation into prominent venture capital firm Andreessen Horowitz regarding its partners holding board seats in competing companies. The nearly year-long probe zeroes in on the firm's board representation at Databricks, which boasts a valuation of $190 billion, and Fivetran, which combined with dbt Labs in June.
Ben Horowitz, co-founder of a16z, serves on the board of Databricks, while partner Martin Casado sits on the board of Fivetran. Several venture capitalists expressed surprise over the investigation because Databricks and Fivetran were not rivals when a16z initially invested in them. Databricks, primarily known for cloud storage, expanded into AI data pipelines and application connectors via its Lakeflow product, which directly overlaps with Fivetran's core business.
Stock photo for illustration only, not from the actual event
Because Andreessen Horowitz backs hundreds of startups, portfolio companies pivoting or expanding into overlapping markets is almost inevitable. While funding direct competitors has grown more common—such as various VCs backing both Anthropic and OpenAI—holding board seats across competing startups creates a much deeper conflict of interest since directors gain access to highly sensitive strategic data.
This investigation highlights a major regulatory shift, signaling that antitrust enforcers are paying closer attention to the influence of large venture capital firms in the tech sector. If pursued aggressively, it could fundamentally alter how venture capitalists manage governance rights and information sharing across their portfolios.
Such conflicts can be resolved if a partner steps down from a board. Alternatively, because a16z appointed different individuals to Databricks and Fivetran, the firm could institute a Chinese wall between Horowitz and Casado to block them from sharing confidential company information with one another, according to an investor.
The inquiry relies on Section 8 of the Clayton Act, a 112-year-old statute prohibiting individuals or entities from serving on competing corporate boards. Because regulators rarely target venture capital using this rule, the entire industry is monitoring the DOJ's actions closely. If a16z must surrender a board seat, founders might place less value on board commitments from top-tier VCs who risk being forced to resign if portfolio overlap triggers future antitrust conflicts.
Source: TechCrunch
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