Andreessen Horowitz’s decision to join Elon Musk’s bid for Twitter Inc. could cause a conflict for firm co-founder Marc Andreessen, who also serves on the board of Meta Platforms Inc., a social-networking rival.
Andreessen Horowitz has committed to invest $400 million in the Twitter takeover, as part of a $7.1 billion finance commitment revealed on Thursday.
That put one of Facebook’s major early investors, who changed its name to Meta last year, in a position to acquire Twitter.
Musk, according to firm co-founder Ben Horowitz, maybe the only person in the world with the “confidence, brilliance, and abilities” to repair Twitter’s problems and “create the public square that we all hoped for and deserve.”
The engagement of Andreessen Horowitz has sparked doubts about the VC firm’s ties to Meta, where Marc Andreessen has been on the board of directors since 2008. Though it’s not uncommon for Silicon Valley investors to invest in competing startups, possible conflicts with publicly traded companies can be more serious, according to John Coates, a Harvard Law School professor.
“It’s safe to argue that Silicon Valley traditions concerning conflicts are risky to bring over to the world of public corporations,” he added. “They’re often tolerated or even promoted in a culture along the lines of ‘it all comes out in the wash.'”
Andreessen Horowitz’s spokesman said the firm would seek legal guidance to ensure compliance with any restrictions governing the sharing of Twitter data with the firm.
Andreessen, 50, has faced scrutiny in the past for alleged conflicts of interest at Meta, including as investing in businesses that were eventually purchased by Facebook, such as Oculus VR.
Investors sued him at one point because he advised Meta CEO Mark Zuckerberg on how to keep his majority voting control even if he sold his shares.
Andreessen has been a vocal supporter of Musk on Twitter, as well as a critic of social media firms’ content filtering procedures. Musk has stated that if he is given control of Twitter, he intends to relax the regulations.
Because the investor isn’t on Twitter’s board of directors, his ties to Meta may not be a problem, according to Stanford University professor David Larcker. “I would expect that many executives and board members trade in the shares of their competitors,” he continued, “though I know of no method to figure this out from public data.”
While Twitter is far smaller than Facebook, it is regarded as a Meta competitor, battling for digital advertising revenue and user posts. According to a source familiar with the situation, when Twitter’s board was considering whether to accept Musk’s offer, they considered the recent drop in Meta’s valuation. They eventually came to the conclusion that the billionaire’s offer was reasonable.
Andreessen isn’t the only one at his venture capital business whose present relationships may become more problematic once Musk’s transaction closes. Vineeta Agarwala, a general partner at Andreessen Horowitz, is married to Twitter CEO Parag Agrawal and invests in biotech and medical firms.
It’s unknown whether Agrawal will continue to run Twitter once Musk takes over, but Musk has already stated that he made his offer for the firm in part because he didn’t trust the current leadership.
Musk expects to take over as CEO for a short time once the deal is complete, according to CNBC.
