DOJ Inquiry into Andreessen Horowitz’s Board Memberships Confounds Venture Capitalists

The Justice Department has launched an investigation into Andreessen Horowitz regarding the involvement of its partners on the boards of competing firms, as reported by Bloomberg.

This ongoing inquiry, which has persisted for nearly a year, is primarily concentrating on the firm’s board roles at Databricks, valued at $190 billion, and Fivetran, which merged with dbt Labs in June. Ben Horowitz, one of the co-founders, serves on Databricks’ board, while colleague Martin Casado holds a board position at Fivetran.

Several venture capitalists expressed astonishment to TechCrunch upon hearing about the probe. Although Databricks and Fivetran are currently operational rivals, they were not in competition at the time a16z invested in both companies, as shared by an anonymous investor from Databricks. While Databricks is well-known for its cloud storage solutions, it has recently expanded into AI data pipelines and application connectors with its Lakeflow initiative, which aligns with Fivetran’s primary business domain.

Given that Andreessen Horowitz has backed numerous startups, it is nearly inevitable that some companies could pivot or expand into overlapping sectors, thus becoming competitors.

Although backing direct rivals has become more common—evidenced by multiple VCs investing in both Anthropic and OpenAI—holding board positions at competing firms introduces significantly heightened conflicts of interest. Typically, board members have access to more sensitive strategic information than those who are merely investors without board roles.

These conflicts could potentially be mitigated by requiring one of the partners to resign from one of the boards. However, since Databricks and Fivetran are represented by different individuals from the same VC firm, a16z could implement a so-called Chinese wall between Horowitz and Casado to prevent the sharing of confidential information regarding the two firms, according to insights from another investor.

The investigation is linked to Section 8 of the Clayton Act, a statute that has been in place for 112 years and prohibits individuals or organizations from serving on the boards of competing companies. As regulators rarely target venture capital using this provision, the industry is closely monitoring the DOJ’s inquiry. If a16z is compelled to forfeit a board position, founders may begin to reassess the value of board commitments from well-known VCs, understanding that investors might need to resign due to potential future conflicts arising from overlapping portfolios.

Andreessen Horowitz has not responded promptly to our requests for comment, nor did it address Bloomberg’s inquiry. Both Databricks and the DOJ have also refrained from commenting.