Andreessen Horowitz is leaving Delaware. Should you go too?
For decades, Delaware was the go-to address for forming a US company. Now even tech giant Andreessen Horowitz is turning its back on the state. Find out why Delaware is overrated, and why Texas or Nevada may be the better choice for European entrepreneurs.
A landslide has begun in the USA, not in the Rocky Mountains but in the world of company formation. One of America's biggest venture capital firms, AH Capital Management (better known as Andreessen Horowitz), has publicly announced that it is leaving Delaware and turning to Nevada instead. The reasons: ideologically charged rulings, growing legal uncertainty and increasing distrust of founding teams.
And they are not alone. At Mount Bonnell Advisors, we have watched with growing skepticism for years as Delaware turned from a once reliable location into a source of uncertainty, especially for founders from Europe.
So what is really going on? Why should you avoid Delaware today, and what are the alternatives?
The Delaware legend: a relic of the past
For decades, Delaware was the state of choice for American corporations. More than 60% of Fortune 500 companies are registered there. Why? The answer was simple: a specialized business court (the Court of Chancery), well-established case law and supposedly business-friendly legislation.
But that old narrative is starting to crumble.
What was once an advantage (a highly specialized court with wide discretion) is increasingly becoming a problem. The more Delaware judges set themselves up as moral arbiters of business decisions, the more dangerous it gets for innovative, risk-taking founders.
The new reality: judges versus entrepreneurs
At the heart of the current criticism is the erosion of the so-called "business judgment rule", a principle that protects board decisions made in good-faith business judgment. In Delaware, this rule was never written into statute; it rests on judge-made law. And that is exactly the problem.
What judges create, judges can destroy.
In recent years, Delaware courts have increasingly hollowed out this protection. High-profile cases in which founders and boards were sued over allegedly excessive stock options or ambitious expansion strategies keep piling up. Most alarming of all: in one case, the court even tried to block a company from moving its domicile out of Delaware, a direct attack on entrepreneurial autonomy.
What really bothers AH Capital (Andreessen Horowitz)
Andreessen Horowitz, one of the most influential players in US tech, goes into detail. Partners Ramaswamy, Hill and McKinley criticize a growing politicization of the Delaware courts that puts subjectivity ahead of legal certainty. Their widely read statement says that the courts no longer act as a technocratic institution but meddle in founders' business decisions.
Delaware's foundation, objectivity and respect for entrepreneurs, has been shaken, they say.
In particular, they criticize the court for questioning board independence whenever exceptional bonuses or equity are granted, which is exactly what the tech world routinely does to retain top talent.
The last straw was a ruling that tried to bar a company from leaving Delaware, on the bizarre grounds that it was not in the shareholders' interest. (The ruling was later corrected, but the damage to Delaware's reputation had already been done.)
AH Capital has therefore decided to reassess its entire portfolio and to stop treating Delaware as the default for new companies.
Nevada, Texas and more: there are alternatives
What many European entrepreneurs don't realize: the USA has 50 states, and each one plays by its own rules. Delaware is just one of them. And it is no longer the most attractive.
In recent years, Mount Bonnell Advisors, based in Austin, Texas, has guided dozens of clients from Europe through forming and structuring US companies. Our experience: in many cases, Delaware is neither necessary nor sensible.
Nevada, for example, has written the business judgment rule into statute. That means founders and managers are far better protected there against arbitrary, subjective rulings. Access to company records is also more restricted, which makes "fishing expeditions" by plaintiffs' lawyers harder.
And new reforms, such as allowing the governor to appoint specialized business judges, show that Nevada means business.
But Texas, our home state, also offers excellent conditions, especially for entrepreneurs with operating businesses, branches or real estate. And: Texas levies no corporate or personal income tax at the state level. Zero. Nada. Your US LLC or Inc. instead pays franchise tax on its margin, and only above the threshold ($2.65 million in annual revenue for the 2026 and 2027 reports). (Our sister site zerotax.llc shows you how to run a US LLC with no US tax liability at all.)
What European entrepreneurs need to know
Many European entrepreneurs choose Delaware for one reason only: because they read about it somewhere. Or because their accountant at home recommended it, without ever having worked with the American business landscape.
But this autopilot choice is extremely dangerous.
Delaware has become a minefield, especially for owner-managed companies, startups, family businesses and holding structures. These are the risks:
1. Arbitrary judges
In Delaware, it is often no longer enough to be in the right. You also have to act "politically correct". Founders who keep large stakes or receive exceptional pay quickly come under suspicion. Ending up in a Delaware courtroom means playing a risky game.
2. Litigious shareholders
Delaware makes it especially easy for shareholders to demand access to records: a favorite entry point for firms specializing in class actions. For owner-managed companies without a broad shareholder base, that is a completely unnecessary risk.
3. Tax disadvantages
Delaware has no sales tax, but it does levy corporate income tax (8.7%) and franchise tax. For holding structures without substance, that hardly matters. But for operating businesses, especially those with customers or an office in Texas, it is a cost driver with no added value.
Why Texas is often the better choice
Texas is not just the most dynamic economy in the USA, with its own power grid, independent energy supply and a culture of entrepreneurship. Texas is also legally stable and tax-friendly.
Our clients benefit from:
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No state income tax
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Attractive LLC laws
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Robust creditor protection rules
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Fast formation procedures
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Low administrative costs
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Reliable courts without ideological outliers
And best of all: Texas is pragmatic. Nobody here cares about political buzzwords, only about economic reality. If you create jobs here, you are valued, not suspected.
What is the venture capital world saying?
A giant like Andreessen Horowitz publicly breaking with Delaware is an earthquake. This firm is no niche player; it is the spearhead of American tech capitalism. If even they no longer feel safe in Delaware, it is high time for European entrepreneurs to rethink their strategy too.
Dropbox, Tesla, Tripadvisor: they have all already walked away.
We expect many more tech companies to follow in the coming months. That has consequences for investors, banks, payment providers and venture capitalists too: anyone who once saw Delaware as a seal of quality will take a closer look from now on.
Our advice to European founders and entrepreneurs
If you do business in the USA or are planning to expand, don't choose your state based on outdated legends. Delaware was yesterday. Today you need foresight, structure and clear strategic thinking.
We help you with:
Borders only exist on the map
If you're ready to break free, we'd be glad to guide you every step of the way. With deep roots in Texas, years of experience in the US market and an English-speaking advisory team, Mount Bonnell Advisors is the right partner for your US strategy.
Got questions or want to optimize your structure?
Then book an initial consultation: discreet, tailored, solution-focused.
You can read more about each state on our pages on the Texas LLC and the Delaware LLC; you'll find more articles under News.
Delaware was yesterday. Texas is today.
The Delaware myth is crumbling. And with it an entire business model that ran on autopilot for decades. For bold, entrepreneurial people, now is the time to take a new path.
We'll help you get there. Not with PowerPoint slides, but with real Texas execution.
Consultation & implementation
If you'd like to find out what this means for your own situation, the best step is to book a consultation.
