Key facts
- The Justice Department is investigating Andreessen Horowitz.
- The probe concerns board seats held by firm partners in competing companies, Databricks and Fivetran.
- Ben Horowitz sits on Databricks' board, and Martin Casado sits on Fivetran's board.
- The investigation is based on Section 8 of the Clayton Act, which prohibits serving on boards of competing firms.
- The probe has been ongoing for nearly a year and is being closely watched by the VC industry.
The Justice Department has initiated a probe into Andreessen Horowitz concerning its partners' board positions in competing companies, Databricks and Fivetran. This investigation, which has been underway for approximately a year, centers on potential violations of Section 8 of the Clayton Act, a law enacted over a century ago that prohibits individuals or entities from serving on the boards of competing firms.
Ben Horowitz, a co-founder of Andreessen Horowitz, sits on the board of Databricks, a company valued at $190 billion. Martin Casado, another partner at the firm, serves on the board of Fivetran. While Databricks and Fivetran were not direct competitors when Andreessen Horowitz initially invested, they have since expanded into overlapping market areas, particularly in AI data pipelines.
Several venture capital professionals have expressed surprise at the probe, noting that portfolio company pivots are common. The situation highlights the potential for conflicts of interest when a single firm holds board seats in companies that become rivals. While a "Chinese wall" could theoretically separate partners to prevent information sharing, the DOJ's focus on Section 8 of the Clayton Act has drawn significant attention from the venture capital industry, which fears potential implications for board commitments if such conflicts lead to forced resignations.