Andreessen Horowitz reincorporates in Nevada, advises founders to leave Delaware
Jul 9, 2025
Key Points
- Andreessen Horowitz reincorporates in Nevada, citing loss of judicial predictability at Delaware's Court of Chancery and positioning the move as a test case for portfolio companies.
- Ben Horowitz argues recent Delaware rulings inject "unprecedented subjectivity" into decisions, breaking the court's historical reputation for consistent expertise.
- Delaware's corporate franchise taxes comprise roughly one-third of the state's operating budget; mass defections by influential VCs could erode the network effects that built Delaware's dominance.
Summary
Andreessen Horowitz is relocating its primary business incorporation from Delaware to Nevada, citing a loss of judicial predictability at the Delaware Court of Chancery. The move represents a significant defection from what was once a near-universal corporate default in venture and tech.
Ben Horowitz argues in a blog post that recent Delaware Court of Chancery decisions have injected "an unprecedented level of subjectivity" into judicial rulings, undermining the court's historical reputation for consistent expertise. He positions Nevada as offering "a technical non-ideological forum for resolving business disputes" with historically business-friendly policies. Andreessen Horowitz is advising its portfolio companies to consider the same move.
The financial stakes are real for Delaware. Corporate franchise taxes, license fees, and entity formation fees make up roughly one-third of the state's operating budget. In 2023 alone, Delaware saw 300,000 new entity formations, including 60,000 C corporations, on top of over 2 million existing entities. The franchise tax ranges from $175 to $400 minimum, capping out at $200,000 to $250,000.
The defection carries symbolic weight beyond the immediate revenue impact. Delaware's dominance rested on network effects. Decades of case law and lawyer familiarity created predictability. Smaller companies incorporated in Delaware pay relatively modest fees and face little incentive to migrate. But if influential figures like Horowitz and Elon Musk, who has advocated for Texas, begin advising portfolio companies to leave, and if high-profile departures accelerate, the erosion of Delaware's case law advantage could eventually compound.
Delaware's ability to weather the shift depends partly on the composition of lost revenue. If it comes from a small number of high-profile exits, the immediate budget impact may be manageable. If the defections eventually become endemic among newly incorporated companies, the longer-term damage to Delaware's corporate identity and tax base becomes material. Most established Delaware corporations, which comprise the bulk of the revenue base, are unlikely to move.