Is Nevada the new Delaware?
Last week, Andreseen Horowitz announced that they would be relocating their primary business from Delaware to Nevada, and encouraged founders and other funds to do the same. Following in the footsteps of SpaceX, Roblox, and Pershing Square Capital Management, this move to Nevada signals a larger disruption in the incorporation status-quo. The message is clear for many of the most important players in the Tech Industry – location can no longer be an afterthought.
So why are these companies leaving Delaware in favor of Nevada?
For years, Delaware’s legal framework, specifically the business-friendly reputation of the state’s Court of Chancery and the substantial body of case law that it has developed over the last century, has made it the place to be for companies. But over the last few years, several key individual rulings have eroded this reputation among select business leaders. Meanwhile, Nevada has passed legislation to strengthen its corporate legal framework and position itself as a viable, or even superior, alternative to Delaware.
In their relocation announcement, Andresseen Horowitz points to the four key reasons why they chose Nevada:
- Statutory Business Judgement Rule - Nevada has codified the business judgment rule in statute, preventing judges from modifying or weakening the presumption that directors act in good faith, unlike Delaware's judge-made rule that can be changed.
- Shareholder Limits on Director and Officer Exposure - Nevada law provides broad default protections against individual liability for officers and directors.
- Inspection of corporate books and records - Nevada restricts inspection rights to shareholders with 15% or greater ownership, compared to Delaware's broader access rules.
- Established Business Courts - Nevada has been upgrading its business court system with specialized judges and new legislation allowing jury trial waivers, working to match Delaware's judicial expertise while avoiding its recent subjective decision-making trends.
No location decision should be made by default, and it's always in the best interest of companies to evaluate which jurisdictions are the best fit for their needs. Companies often miss-out on substantial incentives when they fail to thoroughly evaluate different jurisdictions beyond incorporation laws. While Andreseen Horowitz’s move was primarily driven by legal framework concerns, companies can also benefit from state-specific incentives including tax credits, workforce development programs, and relocation packages that can significantly impact their bottom line.
The move highlights a broader lesson: location matters now more than ever.
Whether you're considering incorporation, relocation, or expansion, settling for the status quo is no longer sufficient, and every jurisdiction offers different advantages.
Companies should take these steps to ensure that they’re getting the most out of their global locations:
- Audit your current jurisdiction - Are you maximizing available benefits?
- Research alternatives - What incentives and protections are you missing?
- Consult experts - Work with legal, tax, and incentive professionals who understand multi-state opportunities.
- Consider the full picture - Beyond incorporation, evaluate operational incentives, talent access, and the regulatory environment.
The companies leading this Delaware exodus aren't just chasing legal advantages, they're making strategic location decisions that align with their business objectives. In today's competitive landscape, that kind of thinking about jurisdiction selection – including evaluation of available state incentives, tax benefits, and economic development programs – can be the difference between surviving and thriving.
At Upsite, we help companies optimize their footprints and sustain growth by matching them with available incentive programs and benchmarking data across U.S. States.
