In recent months, a debate has raged about whether Delaware companies should up stakes and reincorporate elsewhere, particularly Nevada or Texas. While this debate has sparked a great deal of discussion, and while a few high-profile companies have made the move, by and large the number of companies actually moving remained small. But now in a potentially significant development for the whole DExit topic, Silicon Valley VC firm Andreesen Horowitz has announced that it is leaving Delaware for Nevada, and, perhaps event more significantly, encouraging its portfolio companies to incorporate in Nevada as well. As discussed below, this development could represent an inflection point in the DExit debate, with potential significance for the corporate litigation going forward.

Background

AH Capital Management, LLC, familiarly known as Andreesen Horowitz or a16z, is a Silicon Valley venture capital firm. By some reports, it is the largest VC firm in the country, with $42 billion assets under management. When the firm was formed in 2009, it was organized under the laws of the state of Delaware.

In a July 9, 2025, three principals of the firm posted an open letter on the firm’s website, entitled “We’re Leaving Delaware, And We Think You Should Consider Leaving, Too” (here), announcing the firm’s intent to reincorporate in Nevada. In presenting its proposed change, the memo’s authors noted that while the firm “could have made this move quietly … we think it is important for our stakeholders, and for the broader tech and VC communities, to understand why we’ve reached this decision.” The authors lay out their reasons for the move in the memo, as well as why they think their decision is important for those broader communities.

The memo opens with the authors’ observation that while incorporation in Delaware was once “a no-brainer,” recent Delaware Court of Chancery decisions “have injected an unprecedented level of subjectivity into judicial uncertainty into what was once consider the gold standard of U.S. corporate law,” while at the same time Nevada has “taken significant steps in establishing a non-technical, non-ideological forum for resolving business disputes.

In explaining why their views of Delaware have changed, the authors cite the actions of both the Delaware courts and the Delaware legislature. In the authors view, the judge-made principles of the business judgment rule have increasingly become subject to exceptions, to the point that the exceptions “have begun to swallow the rule.” In addition, director independence has been increasingly questioned in a number of high-profile cases.

While the Delaware Legislature has taken some exception to these developments, “its actions fail to take full measure of the problem” – which is, according to the authors, that “Delaware courts can at times appear biased against technology startup founders and their boards.” The legal uncertainty now resulting from Delaware litigation “is a real cause for concern for entrepreneurs and their professional investors.” That is, according to the memo’s authors, why “significant technology companies,” such as Dropbox, Tripadvisor, and Tesla have take action to incorporate in other jurisdictions.

Nevada, the authors say, has “taken a different path,” particularly through legislation allowing companies to waive jury trial in civil cases, and permitting direct appointment of business court judges by the Governor. The memo also identifies four additional specific ways Nevada is increasingly more attractive to entrepreneurs:

1. Statutory Business Judgement Rule: In Nevada, the business judgment rule is codified in statute. The authors contrast this to Delaware, where the judge-made business judgment rule remains subject to judicially created exceptions (such as, for example) the “entire fairness doctrine,” which can dilute the protection afforded by the business judgment rule.
2. Shareholder Limits on Director and Officer Exposure: Nevada, by default, permits broad protections against individual liability for officers and directors, and monetary damages are excluded unless the plaintiff can show that the defendant did not act in good faith or engaged in intentional misconduct. While Delaware allows for limitation of director and officer liability, these limitations are subject to judicial doctrines, which is “particularly troublesome” when Delaware’s courts “appear to show bias against founders and their boards,” and increasingly are applying large damages against defendants.
3. Inspection of Books and Records: Nevada provides that only 15% or greater stockholders have the right to inspect books and records, which, according to the authors, significantly limits the plaintiffs’ lawyers ability to engage in fishing expeditions. By contrast, Delaware allows any stockholder of record to inspect a company’s books and records. While the Delaware legislature recently limited the categories of materials subject to books and records requests, these limitations “do not overcome the advantages of the bright line rule adopted by Nevada.
4. Established Business Court: Delaware’s long-standing advantage has been the specialized expertise of its courts. However, the authors assert, “that advantage has eroded as judicial decision-making has increasingly seemed to veer away from the technical expertise for which it is known.” Nevada has its own dedicated business court, the judiciary for which is going to be appointed by the Governor. By allowing companies to waive the right to a jury trial, “Nevada has taken a significant step to ensure that business court judges, rather than uninformed lay juries, can resolve complex commercial business disputes.”

In its opening explanation for the firm’s relocation, the memo’s authors note that there is “often a reluctance to leave Delaware, based in part on concerns for how investors will react.” The memo’s authors express their hope that, as the country’s largest VC firm, perhaps their firms decision “signals to our portfolio companies, we well as to prospective portfolio companies, that such concerns “may be overblown.” While the firm will continue to fund companies incorporated in Delaware, “we believe Nevada is a viable alternative and may make sense for many founders.”

Discussion

What makes the Andreesen Horowitz memo so interesting is not just that the firm is loudly announcing its plan to move from Delaware to Nevada, but it is doing so loudly for the express purpose of influencing its portfolio companies and its prospective portfolio companies, in their choice of state of incorporation. In other words, the country’s largest VC firm is expressly trying to influence the community of start ups and tech firms, as well as the VC firms active on those communities, to prefer and favor Nevada as the state of incorporation over the traditional favorite state of Delaware.

Andreesen Horowitz’s move seems likeliest to have influence within the company’s own portfolio of companies, a not inconsiderable thing in and of itself. The more interesting question is whether or not it will have more widespread influence, on startups and tech companies generally. This possibility of more widespread influence is interesting, because up until now, the companies electing DExit have consisted of a few large established companies, while at the same time the vast majority of existing Delaware companies are making no changes. If the considerations the Andreesen Horowitz firm cites were to influence more startups to incorporate as an initial matter in Nevada (or elsewhere) rather than in Delaware, that could change the current dynamic favoring presumptive Delaware incorporation.

I personally think that the Andreesen Horowitz move could prove to be an important inflection point in the current state of incorporation debate. If in fact the DExit dynamic shifts from a few established companies to a wider range of startups selecting their initial state of incorporation for a state other than Delaware, not only would the weight of the place of incorporation shift, it could also effect a broader change in overall corporate law, as Delaware law become less important and other states more protective laws alter the corporate litigation dynamic. Time will tell of course, but the possibilities are there, and are quite interesting as well.

One observation about the Andreesen Horowitz memo, which is how little the Delaware legislature’s adoption of S.B. 21 seems to have affected the firm’s analysis. While I think some in the Delaware corporate law community had hoped S.B. 21 might “stem the tide” of corporate departures, it is fair to say that the changes enacted in S.B. 21 had little or no impact on the firm’s decision to leave the state. Indeed, the firm’s memo expressly states that the Delaware legislature’s actions “fail to take full measure of the problem” Whatever else might be said about S.B. 21, it seems to have little impact on the state of incorporation debate. So much for S.B. 21 stemming the tide.

I do think it is a fair question to ask how valid the justifications the firm gives for its decision to move really are. Along those lines, I think it is important to note that law University of Colorado law professor Ann Lipton, in a social media post, said that the Andreesen Horowitz memo “literally misstates Delaware law.” In his July 11, 2025, post on the CorporateCounsel.net blog about the firm’s memo, John Jenkins characterizes the firm’s arguments in favor of abandoning Delaware as “tendentious.” (I had to look it up; “tendentious” means “expressing or intending to promote a particular cause or point of view, especially a controversial one.”)

In my view, the memo completely understates the value of Delaware’s experienced and specialized judiciary, and completely overstates the value of Nevada’s new and untested business courts. Maybe someday there will be a sufficient track record to be able to compare the courts in some meaningful way, but we aren’t there yet, and in meantime, I think that the Delaware courts’ long and distinguished history has to, or at least should, weigh heavily in Delaware’s favor.

All of those observations notwithstanding, I think it is possible the Andreesen Horowitz move will have an impact, and to that extent at least, we may be moving toward a new era in corporate law in the U.S., one that could result in less litigation overall and more favorable outcomes for corporate defendants. If more startups and tech firms really do start to favor Nevada over Delaware as the state of initial incorporation, not only will there be fewer companies in Delaware, but there will be less corporate litigation in Delaware’s courts. The result could be a very different corporate litigation environment. Of course, it will be many years before we know for certain how much things have changes, and in the meantime, I don’t see D&O insurance underwriters changing the practices in anticipation of the changes. But it could be very interesting to watch all of this unfold.

I confess that at the outset of the DExit debate, I thought this whole thing might be just a tempest in the teapot, stirred up by Elon Musk because he was upset that the Delaware courts barred his massive pay package. It does seem now that there is more to this than might have originally appeared. The state of incorporate debate could mean we are headed into a very different corporate law environment in the U.S., potentially representing a different corporate liability arena, as well.