DOJ Probe Into a16z Board Seats Signals Potential Shift in VC Oversight
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A Justice Department investigation into Andreessen Horowitz's dual board roles at Databricks and Fivetran invokes a century-old antitrust law, raising concerns over future growth equity commitments.
The Justice Department has initiated a probe into Andreessen Horowitz regarding the firm's partners serving on the boards of competing companies, as TechCrunch first reported via Bloomberg. The investigation, which has lasted nearly a year, focuses on board seats held by the firm at Fivetran and Databricks, the latter of which carries a $190 billion valuation.
The conflict revolves around the specific board placements of the firm's partners: co-founder Ben Horowitz sits on the board of Databricks, while partner Martin Casado holds a seat at Fivetran. While Fivetran combined with dbt Labs in June, the two companies are now viewed as rivals. TechCrunch reports that Databricks, primarily known for cloud storage, has moved into application connectors and AI data pipelines via its Lakeflow product—the core business of Fivetran.
An anonymous Databricks investor told TechCrunch that the two companies were not competitors at the time Andreessen Horowitz first invested in them. The investor noted that because the firm backs hundreds of companies, it is nearly inevitable that startups will pivot or expand into overlapping markets. To mitigate such conflicts, the investor suggested the use of a "Chinese wall" to prevent Horowitz and Casado from sharing confidential information, as they are different individuals.
The DOJ is invoking Section 8 of the Clayton Act, a 112-year-old statute that prohibits individuals or entities from serving on the boards of competing firms. TechCrunch notes that regulators have rarely applied this specific rule to the venture capital industry, leading VCs to express surprise at the probe.
While the industry has seen a rise in VCs funding direct rivals—citing the simultaneous backing of OpenAI and Anthropic as an example—holding board seats is viewed as a more significant conflict because directors have access to sensitive strategic data.
The outcome of the probe could impact how founders view venture partnerships. TechCrunch reports that if Andreessen Horowitz is forced to relinquish a seat, founders may place less value on board commitments from top-tier VCs, fearing that investors could be compelled to step down if portfolio companies eventually compete.
Andreessen Horowitz, Databricks, and the DOJ declined to comment on the matter.