Earlier this month, Andreessen Horowitz (a16z) announced they’re moving their incorporation from Delaware to Nevada an announcement that’s rippling through startup, legal, and governance circles alike. Their post and the accompanying WSJ’s video discussion make a compelling case: Delaware’s historic reputation for corporate governance has been undermined by legal uncertainty, and Nevada may offer clearer, more predictable protections for boards and founders.

But this isn’t just about Delaware or Nevada. It’s about trust in legal infrastructure and whether the assumptions that built decades of corporate governance still hold.

Why Delaware Became the Default

For years, Delaware has been the go-to jurisdiction for incorporation in the U.S. Over 60% of Fortune 500 companies are Delaware entities, thanks to its:

• Business-friendly courts (notably the Court of Chancery)

• Well-developed corporate case law

• Flexibility in structuring governance

• Predictability in resolving disputes

This predictability was Delaware’s biggest value proposition; companies knew the rules, and the rules were tested.

What Changed?

According to a16z, what’s changed isn’t the law itself, but how it’s being interpreted. Recent decisions (like TripAdvisor, Moelis, and Snap) have introduced what they call “subjective judicial scrutiny,” where long-accepted governance mechanisms like dual-class stock or protections for independent directors are suddenly being questioned.

For founders, boards, and investors, that uncertainty raises a fundamental question: Can we still trust Delaware to uphold our governance choices?

Why Nevada?

Nevada has made a concerted effort to attract businesses with a more codified, pro-director legal environment. It offers:

• Strong statutory protections under its version of the business judgment rule

• Explicit limits on director liability

• A legal framework that defers more to board decisions, reducing the risk of judicial second-guessing
  
  

It’s no surprise that companies like Tesla, Dropbox, and now a16z have either reincorporated in Nevada or taken serious steps to diversify their jurisdictional exposure.

Strategic Implications for Corporate Leaders

This shift isn’t about following a trend it’s about reassessing assumptions that underlie your entire corporate structure. Some critical questions now coming to the surface:

• Is your current jurisdiction aligned with your governance philosophy?

• Do your charter and bylaws still offer the protections you intended?

• If your legal framework were challenged, how confident are you in the outcome?
  
  

Even if you’re not ready to leave Delaware, these are the kinds of conversations boards and executive teams should be having.

Note: Companies Are also Relocating HQs from California to Texas

Alongside changes in incorporation strategy, many companies are also reevaluating where they physically base their headquarters and California is losing ground. From a legal standpoint, California imposes more complex regulatory requirements, aggressive enforcement from agencies like the Franchise Tax Board, and expansive interpretations of nexus and business activity that can increase exposure to audits and litigation. Economically, high corporate and personal tax rates, escalating real estate costs, and burdensome compliance mandates create friction for both growth-stage and mature companies. In contrast, Texas offers a no-corporate-income-tax environment, simplified regulatory structures, and more predictable legal exposure, making it an attractive destination for companies seeking operational efficiency and reduced risk. For many leadership teams, moving HQ is no longer just about cost savings it’s about creating a more stable legal and economic foundation for long-term strategy.

Looking Ahead

a16z’s move is a wake-up call not just for lawyers and VCs, but for anyone managing legal entities, governance, or long-term strategy. The landscape is shifting and the burden is on companies to stay ahead of it.

Incorporation is no longer a one-time decision. It’s a living, strategic choice that must evolve with the law, the market, and the mission of the company.