The Justice Department has been investigating Andreessen Horowitz for nearly a year over board seats. Not fraud. Not securities violations. Board seats.
That’s the part nobody in venture capital can make sense of. After Bloomberg reported the DOJ was looking into a16z for holding board seats at rival AI companies, VCs I’ve talked to were baffled, and on the latest episode of the Equity podcast, Kirsten Korosec, Sean O’Kane and I couldn’t get much further than they did.
“Of all the things that the DOJ would focus on in terms of level of importance, why does this one rise to the top?” Korosec said.
The rule exists. Nobody enforces it.
I spent a couple years working at an early stage VC firm, a much smaller firm than Andreessen Horowitz, as different as you can be while still technically being in the same industry. That colored how I read this one.
There is, obviously, an understanding, and apparently laws, around the idea that you shouldn’t sit on boards of competing startups. But this isn’t something that’s generally enforced very closely. Founders don’t feel great if you’re on the board of their biggest competitor. That’s usually where the enforcement ends.
And startups evolve. You invest in a company doing one thing, the AI boom happens, and suddenly they’re doing something completely different. A year-long federal investigation into that outcome is strange on its face.
The specific seats in question
Ben Horowitz sits on the Databricks board. Partner Martin Casado sits on the Fivetran board.
“And to your point, especially in this AI-driven boom cycle, a lot of companies are changing what they’re doing, and either to jump into the AI space or to take advantage of specific subcategories within it,” Korosec said. “And a company the size of Andreessen, which makes so many investments and is on a lot of board seats, you can see how this would happen.”
That’s the charitable read: collision by accident, not by design.
The silence is the tell
Here’s what stands out more than the investigation itself. a16z has said almost nothing.
Compare that to the Biden years. “Every little policy change, especially related to crypto, generated a day’s worth of posting,” O’Kane said. Now, on an active DOJ matter, nothing.
“It certainly doesn’t seem like it’s something that Andreessen Horowitz feels is such an overreach that we have seen them complaining about it on Twitter, like they were during the Biden era,” O’Kane said. “We haven’t really seen that here. So maybe it’s all going to be copacetic in the end.”
Or their lawyers told them to shut up. Korosec’s read: “But I do think that their reaction and how quiet they’ve been, perhaps they’re listening to their lawyers, perhaps that there is something a little bit bigger here.”
An investigation into the administration’s friends
Bloomberg reported this has been going on for nearly a year, which means it started under the Trump administration. The people who run Andreessen Horowitz are very friendly with that administration, involved in it in some ways, sitting on some councils and things like that.
Which makes the antitrust angle harder to square. “For as much rhetoric as the [second] Trump administration was putting out there when it was still incoming, about being antitrust forward and fighting against the big forces of consolidation or whatever, that really hasn’t borne out,” O’Kane said. “I mean, they settled with Live Nation. They didn’t break up Ticketmaster. We could spend all day talking about how that was a pretty hollow promise.”
He added: “The Justice Department should not be a tool for the president to just direct at enemies or friends or whoever. But it’s just interesting that this is a bridge they were willing to cross, knowing how close they are with this administration.”
There’s a lot of turmoil at DOJ right now, and a lot of open questions about how politicized the office has or hasn’t become. A long investigation into an ostensible ally cuts against every assumption you’d make from the outside.
Why a year is the number that matters
The duration is the part I keep coming back to. If this were just “we don’t think you should hold these two board seats,” there’s not much to investigate. You tell them to stop, or you tell them what to do instead. Done in a week. (Yes, I may be a little naive about how DOJ investigations work.)
A year suggests there’s a lot we don’t know. There has to be some other, more serious allegation. Otherwise, what is there to investigate for that long?
Korosec’s counter is fair: “you can have two truths. Meaning, you can have a slow, arduous process because of an inefficient DOJ, and also, you can have some sort of smoking gun or bigger issue.”
Worth noting that a16z has drawn scrutiny on adjacent ground before. Two years ago, O’Kane reported on Ben Horowitz personally making connections between a16z-backed startups and the local police department in Las Vegas, which has, as he put it, “maybe more of an anti-competitive flavor to it than this.”
What it means for everyone else writing checks
The practical question for the rest of the industry: does anyone change behavior, or is this filed as a weird outlier while firms keep taking board seats and stop worrying about where those portfolios drift?
O’Kane’s theory is that the outlier read is the wrong one. “Instead of, if you perceive this as [an] antitrust violation, going after all these other, smaller firms for doing something like this, you go after Andreessen Horowitz and you set the example,” he said. “And then maybe that puts these other people in more of a wary, cautious position.”
There’s a structural explanation too. The SEC and the DOJ have both said public company investigations aren’t a priority, and that they’d rather go after individuals. The administration backed off guilty pleas Boeing entered. It settled with Live Nation.
“If you’re not going after corporate prosecutions,” O’Kane said, “maybe one of the side effects is, you wind up paying a bit more attention to stuff like this.”
That’s the version worth watching. Not that board-seat overlap suddenly became a serious antitrust priority, but that enforcement attention has to land somewhere, and the Fortune 500 door got closed. If you’re a partner sitting on five boards in the same broad category right now, the useful move isn’t to panic. It’s to go look at what those five companies are shipping this quarter versus what they pitched you when you wrote the check.
