DOJ Probes a16z Over Competing Board Seats

The DOJ is investigating Andreessen Horowitz over partners sitting on the boards of competing startups, raising major antitrust concerns for the VC industry.

The Department of Justice is conducting an antitrust investigation into the venture capital firm Andreessen Horowitz (a16z), according to reports from TechCrunch. The probe centers on the firm’s board representation at two portfolio companies, Databricks and Fivetran, which have evolved to become direct competitors in the data space. A16z co-founder Ben Horowitz sits on the board of Databricks, while general partner Martin Casado is on the board of Fivetran. This situation, known as an “interlocking directorate,” has reportedly been under DOJ scrutiny for nearly a year. The investigation signals that regulators are now applying long-standing antitrust principles to the unique operational structure of the venture capital industry, potentially creating a landmark case for startup governance and VC investment strategy.

The legal basis for the investigation likely stems from Section 8 of the Clayton Antitrust Act of 1914, a law designed to prevent anti-competitive behavior by prohibiting a single person or entity from holding board positions at competing companies. While traditionally enforced against large, public corporations, its application to a VC firm is a novel move. In the venture world, it is common for a single firm to invest in multiple companies within the same sector, with different partners taking board seats. The DOJ’s inquiry suggests it may view the VC firm itself as the single entity, meaning that two partners from the same firm on the boards of competing startups could be seen as a violation. This interpretation challenges the conventional VC model of building a broad portfolio in a specific industry to maximize the chances of backing a market winner.

This regulatory scrutiny has significant implications for founders, CTOs, and their leadership teams. A board seat is a critical component of a venture investment, offering startups strategic guidance, industry connections, and operational oversight. The DOJ investigation introduces a new layer of risk into this relationship. Founders must now consider whether a potential investor’s portfolio contains companies that could become future competitors, as this could lead to the forced resignation of a key board member or entangle the startup in a regulatory inquiry. This may compel founders to conduct deeper due diligence on a VC's entire portfolio and their policies for managing conflicts, potentially limiting their fundraising options or forcing them to choose investors with less conflicting sector exposure.

The probe could force a fundamental shift in how the entire venture capital industry operates. VCs often build expertise and gain an edge by making multiple investments in a specific domain, but this strategy now carries a clear regulatory risk. In response, firms may need to implement stricter internal firewalls between partners, become more selective about taking board seats, or specialize in narrower verticals to avoid portfolio overlap. For founders, the key takeaway is that an investor’s portfolio is now a critical part of due diligence. Asking potential VCs how they navigate and manage conflicts of interest between portfolio companies is no longer just good practice—it is an essential step to mitigate future governance and legal risks for your company.

All eyes in the tech and venture capital world will be on the outcome of this investigation. If the DOJ takes formal action against a16z, it will set a powerful precedent and likely trigger a wave of proactive board resignations and policy changes across the industry. This could lead to new best practices for corporate governance in venture-backed startups. Conversely, if the investigation is closed without action, it may affirm the status quo, but the chilling effect of the probe will likely make both VCs and founders more cautious about board composition. This case represents a potential inflection point in how regulators view the concentration of power and information within the startup ecosystem.