DOJ probe into Andreessen Horowitz's board seats at rival firms puzzles VCs
The US Justice Department has been investigating venture firm Andreessen Horowitz for nearly a year over its partners holding board seats at competing companies Databricks and Fivetran, Bloomberg reported. Several VCs said they were surprised by the news.
The Justice Department has opened a probe into Andreessen Horowitz (a16z) concerning its partners simultaneously sitting on the boards of rival companies, according to a Bloomberg report. The nearly year-long investigation centers on the firm's board seats at Databricks, valued at $190 billion, and Fivetran, which merged with dbt Labs in June.
A16z co-founder Ben Horowitz sits on Databricks' board, while partner Martin Casado holds a board seat at Fivetran. Several venture capitalists told TechCrunch they were caught off guard by news of the investigation.
An anonymous Databricks investor noted that Databricks and Fivetran only became competitors over time — when a16z first invested in the two startups, they were not rivals. Databricks is primarily known for cloud storage, but its Lakeflow product has pushed it into AI data pipelines and app connectors, which is Fivetran's core business.
A growing conflict-of-interest question
Because a16z has backed hundreds of companies, some portfolio startups inevitably end up competing with each other over time. While funding direct rivals has become more common recently — several firms have backed both Anthropic and OpenAI, for example — holding board seats at two competing companies raises a much sharper conflict, since directors typically access far more sensitive strategic information than ordinary investors.
One investor said such conflicts can be managed by establishing a so-called Chinese wall between Horowitz and Casado, barring them from sharing confidential information about the two companies with each other.
The probe invokes Section 8 of the Clayton Act, a 112-year-old law that bars individuals from serving on the boards of competing companies simultaneously. Because regulators have rarely applied this provision to venture capital, the industry is watching the case closely. Should a16z be forced to give up a board seat, founders may come to place less weight on board commitments from top VCs, since such investors could later be compelled to step down if portfolio overlaps create conflicts. Andreessen Horowitz, Databricks and the DOJ all declined to comment.
