The Nevada Stack: How A16z Is Building a Fiduciary Firewall Across Its Ecosystem
On July 9, Andreessen Horowitz -- the largest VC in the world -- announced that it was canceling its Delaware domicile and moving to Nevada. Here's why and how that's a big deal for all concerned.
This is researched and written in partnership between Proof Causal Advisory and OpenAI, Claude, and Perplexity.
A Jurisdictional Playbook Hiding in Plain Sight
Andreessen Horowitz’s 2025 decision to relocate AH Capital Management from Delaware to Nevada was framed publicly as a reaction to rising fiduciary exposure and legal ambiguity in Delaware. But beneath the surface lies a more ambitious possibility: that A16z is constructing a jurisdictional firewall designed to extend well beyond its GP entity—a fiduciary shield deployed across its portfolio.
This is the Nevada Stack: a layered, scalable architecture of legal insulation that benefits the firm at every level, from LP relations to startup governance. Whether or not a formal agreement exists between A16z and the State of Nevada, the incentives are deeply aligned—and the outcome is a model of governance standardization through legal arbitrage.
The GP-Level Rebase: Tactical Migration to Lower Exposure
By reincorporating AH Capital Management in Nevada, A16z gains immediate benefits:
Immunity from Caremark-style oversight liability (In re Caremark, 698 A.2d 959 (Del. Ch. 1996)),
No judicial extension of fiduciary duty to officers as seen in McDonald’s (289 A.3d 343 (Del. Ch. 2023)),
Sharply reduced exposure to books-and-records demands (compare NRS § 78.257 to DGCL § 220).
This creates a clean legal moat around the General Partner (GP) entity, preventing limited partners (LPs), co-investors, or employees from initiating discovery or derivative actions unless they can meet the 15% threshold and prove intentional misconduct or fraud (NRS § 78.138).
The Portfolio Cascade: Governance by Suggestion, Not Mandate
While A16z has not publicly stated that its portfolio companies must move to Nevada, its leverage makes this outcome highly likely:
As a lead investor, A16z controls term sheets and charter negotiations,
It seats board members and defines governance defaults,
It can "suggest" incorporation in Nevada or propose adopting Nevada-style indemnification and inspection limits regardless of jurisdiction.
Startups seeking capital will increasingly interpret Nevada incorporation as the path of least resistance to term sheet approval—and as a gesture of alignment with the fund's legal posture.
This is fiduciary conformity by influence—not force, but inevitability.
The Legal Stack: Systematic De-Risking From Top to Bottom
The benefits of this Nevada stack extend across the organizational chart:
A. Limited Partners
LPs cannot use books-and-records requests to investigate GP conduct without a 15% holding—which is functionally impossible in fund structures.
Dispute resolution provisions in Nevada can include mandatory bench trials under AB 239, avoiding jury unpredictability.
B. Portfolio Companies
If incorporated in Nevada, startups benefit from:
No Unocal or Revlon scrutiny during M&A,
High barriers to derivative suits (intentional misconduct standard),
Inspection rights only to 15%+ holders (NRS § 78.257),
Broad indemnification of directors and officers.
C. Founders and Management Teams
Can act with greater strategic discretion,
Face fewer information demands from small equity holders,
Enjoy legal protection even in the presence of governance red flags.
D. A16z as Board Member or Observer
Reduces secondary exposure,
Makes internal litigation less likely,
Preserves optionality during down rounds, recapitalizations, or controlled exits.
The Political Layer: Did Nevada Cut a Deal?
There is no public evidence that Nevada and A16z struck a formal agreement. But the alignment of interests is unmistakable:
Nevada gains substantial credibility as a viable alternative to Delaware,
A16z delivers incorporations, revenue, and PR lift,
And both parties benefit from a rising tide of venture-backed migration.
Like tax incentives in other domains, this could quietly evolve into an economic development play cloaked in corporate governance reform.
The Systemic Risk Layer: When Fiduciary Enforcement Becomes Optional
While the Nevada Stack may make sense from a legal risk arbitrage standpoint, it comes at a cost:
Red flags go uninspected,
Minority shareholders are silenced,
Bad actors gain cover, and
Governance becomes performative rather than enforceable.
This weakens the broader venture ecosystem. When the largest and most sophisticated actors opt out of enforceable governance, they implicitly set the tone for others to follow—without the ethical or procedural safeguards that once defined fiduciary capitalism.
Sidebar: The Asymmetry at the Heart of the Stack
In a typical VC fund structure, nearly everyone is a minority holder:
LPs have passive, fractional interests.
Founders and employees often hold 0.5–10%.
Co-investors and angels are dispersed across diluted cap tables.
Only the GP—in this case, A16z—controls sufficient influence to define legal structures and enforce alignment.
And under Nevada law:
You need 15% ownership to inspect records (NRS § 78.257).
Derivative suits require proof of intentional misconduct or fraud (NRS § 78.138).
The result: those with the least power have no enforceable oversight rights.
That isn't just asymmetry. It's architectural disenfranchisement.
Conclusion: The Stack Works. But Should It Exist?
Andreessen Horowitz has built a brilliant jurisdictional model.
The Nevada Stack is elegant, layered, and rational.
But if fiduciary duty is only real in states where it can be enforced, then building portfolios on legal structures designed to block oversight isn’t just aggressive.
It’s systemically extractive.
A governance system that depends on visibility cannot survive when the most powerful players build to avoid it.