DOJ’s probe into Andreessen Horowitz over board seats baffles VCs
Since portfolio companies often pivot and expand into competing markets, investors view occasional conflicts of interest as unavoidable for large VC firms.
The Justice Department has initiated an investigation into Andreessen Horowitz (a16z) concerning its partners serving on the boards of competing companies, according to Bloomberg. The probe, which has been ongoing for nearly a year, specifically targets the firm's board seats at Databricks and Fivetran, both of which are now competitors.
Ben Horowitz, a16z's co-founder, serves on Databricks' board, while partner Martin Casado is on Fivetran's board. The firms were not direct competitors when a16z invested in them. Databricks specializes in cloud storage and has recently expanded into AI data pipelines and application connectors, while Fivetran focuses on data integration and synchronization.
The investigation uses Section 8 of the Clayton Act, which prohibits individuals from serving on the boards of competing companies. This rule is rarely enforced, so the venture capital industry is closely watching the DOJ's probe. If a16z is forced to relinquish a seat, it could affect the value founders place on board commitments from top-tier VCs, as they may become more hesitant to accept such commitments if future conflicts arise.
Written by urgent.news from TechCrunch's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
