By: Chintan Panchal & Tom Scriven 

New York, New York – The venture world took notice this week when Andreessen Horowitz (a16z), one of the most influential names in Silicon Valley, announced its decision to leave Delaware—the longtime default for U.S. corporate incorporations. 

Their destination? Nevada. 

In an era where legal infrastructure can directly impact business outcomes, this move is more than just a paperwork shuffle—it signals rising frustration with Delaware’s increasingly unpredictable legal environment. And while Nevada may be the immediate beneficiary of a16z’s exit, Texas is also emerging as a serious long-term competitor as well. 

Why a16z—and Others—Are Rethinking Delaware 

Delaware has long been the gold standard for incorporation of business entities, known for its business-friendly courts and deep corporate law expertise. However, recent decisions suggest a shift toward jurisdictions with potentially stronger shareholder and investor protections. Delaware courts have expanded liability for directors and controlling shareholders, applying stricter scrutiny to transactions involving executive compensation and insider interests. Several rulings have invoked Delaware’s most stringent legal standard—the entire fairness doctrine—in cases challenging change of control transactions that previously faced more lenient review. As a result, directors face greater exposure, and companies are grappling with growing uncertainty around board approvals, compensation, and related-party transactions. 

For many—particularly in founder-led and venture-backed companies—this evolving legal landscape is prompting a reassessment of Delaware’s long-held status as the preferred home for incorporation. 

a16z explicitly cited the need for greater legal predictability in its decision to reincorporate in Nevada, where laws generally offer more protections for boards and controlling shareholders. 

But Nevada may only be part of the story. 

Texas Is Quietly Building an Even Bigger Challenge 

While Nevada has long been known for its protective statutes, Texas is approaching this competition differently—with a sweeping, systematic strategy that’s turning heads in legal circles. 

Here’s what sets Texas apart: 

• Advisory Opinions: Texas now allows its business courts to issue advance judicial determinations regarding certain transactions involving conflicts of interests —providing pre-emptive legal clarity to companies and their boards. This is a major innovation not available in Delaware or Nevada.
  
• Modernized Corporate Laws: Texas recently codified protections like the business judgment rule and expanded flexibility for shareholder claims, while also allowing companies to waive jury trials in internal disputes—key tools for reducing litigation risk. 

• Specialized Business Courts: Texas launched five new business court divisions in major cities in 2024 and established a dedicated Texas Business Court in 2023, to provide fast, specialized resolution of complex corporate disputes—mirroring the role long played by Delaware’s Chancery Court. 

• Tax & Cost Advantages: Texas offers significant economic incentives, including no corporate income tax and lower filing/maintenance costs compared to Delaware. 

How Nevada Positions Itself 

While Texas is pursuing a broad legal overhaul, Nevada has long positioned itself as a haven for corporations seeking strong protections for directors and executives, with a simpler legal framework that appeals to certain companies. Key features include: 

• Strong Liability Shields: Nevada offers some of the strongest statutory protections for directors and officers, significantly limiting personal liability in lawsuits over fiduciary duty claims, including for breaches of care. 

• Business-Friendly Statutes: Nevada law allows broad discretion in corporate governance matters, including greater flexibility around director indemnification and fewer restrictions on board actions compared to Delaware. 

• Minimal Judicial Interference: Courts in Nevada traditionally apply a hands-off approach to corporate disputes, with limited judicial scrutiny of internal governance decisions—an approach often viewed as highly management-friendly. 

• Privacy Protections: Nevada provides greater confidentiality in corporate filings, appealing to companies that prioritize privacy around ownership and governance structures. 

• Low Fees & Taxes: Nevada has no corporate income tax, low filing fees, and minimal ongoing compliance requirements, which can be attractive to smaller companies or those seeking to minimize administrative burdens. 

Why Venture Should Pay Close Attention 

Multiple companies valued at over $1 billion have recently left Delaware, fueling talk of a growing “Dexit” movement. What should you look for?  

For Founders 

Founders and startup operators would be wise to watch this trend closely. Many early-stage companies—and their investors—are reassessing Delaware as the default, particularly in light of jurisdictions offering: 

• More predictable governance frameworks 

• Faster, specialized business courts for dispute resolution 

• Lower taxes and filing fees 

Texas, in particular, is positioning itself as an option to watch—pairing recent corporate law reforms with its growing tech and venture ecosystems in cities like Austin and Dallas. 

While it’s too early to say whether Texas, Nevada, or any other state will fully displace Delaware, these developments signal a broader shift in how startups may think about their legal home. 

For Investors 

Investors—private equity and venture capital funds and their limited partners for example — as well as directors of corporate boards, also have reason to pay close attention. 

Changes in incorporation can directly impact: 

• Shareholder rights and fiduciary protections: States like Texas and Nevada tend to offer stronger protections for boards and executives, which could limit shareholder rights in certain situations, such as compensation approvals, insider transactions, or exit events. 

• Board dynamics and oversight: More management-friendly jurisdictions may reduce investor leverage in governance disputes or restructuring efforts. 

• Legal predictability and enforcement: Delaware’s well-developed case law provides clear expectations in M&A, fiduciary duty, and control disputes—uncertainty in newer jurisdictions may complicate enforcement, particularly in distressed scenarios. 

As companies increasingly explore alternatives, investors should revisit: 

• Diligence practices around incorporation  

• Contractual protections in deal documents 

• Exit planning and risk analysis tied to corporate domicile 

As companies explore alternatives, understanding the legal frameworks of emerging jurisdictions is becoming an essential part of long-term risk management for investors. 

The Bottom Line 

Like many corporate decisions, the choice of incorporation is highly situational. The key takeaway isn’t that Texas or Nevada is inherently better—but that neither is a fringe or “non-traditional” option. Companies shouldn’t dismiss either jurisdiction out of habit, nor should they assume their more protective stance toward boards and executives is the right fit in every case. The selection of a state of incorporation should be made based on a clear-eyed assessment of a company’s specific governance needs, risk tolerance, investor expectations and long-term goals.