Elon Musk is winning a revolution against Delaware

Once the default for businesses, new incorporations are down 10 points

Let’s talk about Delaware. For decades, it was the undisputed choice for company incorporations, claiming roughly 80% of the tech sector. Then Tesla left. Then a16z wrote a blog post about why it was leaving. Now that number sits closer to 70% and falling. The most boring decision in starting a company suddenly isn’t boring anymore.

What happened?

• Tesla’s board tried to give Elon a $56B pay package.

• A judge in Delaware’s business court struck it down, saying the Tesla’s board lacked independence from Musk, making the package unfair to investors.

• Elon moves his companies Tesla, SpaceX, and xAI to Texas. Neuralink went to Nevada.

According to Ramp data, Elon’s move has prompted other tech companies to follow suit. The share of new incorporations in Delaware has fallen nearly 10% since 2021.

Why do firms incorporate in Delaware in the first place? It’s not about taxes. Delaware has a robust court system for business law with decades of precedence and experienced judges. If you’re being sued, would you rather go before a boring state court judge who frequently deals with traffic tickets, or a Delaware judge who’s an expert in complex documents related to board control disputes? That’s Delaware’s whole thing.

So the decline is weird for two reasons. First, the issues facing Elon’s companies apply to virtually no one else. Second, we find that firms are leaving Delaware most often for the state they’re already headquartered in, not for a business-friendly alternative that has some history of predictable case law. So, unless you’re one of Elon’s companies, it’s not clear what businesses are getting out of this.

Our findings:

• Delaware may be falling, but it has a long way to go. 70% of tech company incorporations were in Delaware in the third quarter of 2025. That’s down 10 points from 2021 (80 percent), but it’s clearly still the default for new businesses.

• Elon is flexing his influence. The decline in Delaware is specific to the tech sector. Excluding tech, the share of firms that incorporated in Delaware has held flat (42 percent) since 2021. It looks like startup founders are following Elon’s lead.

• There is no clear alternative state of incorporation: Florida, Texas, and Nevada, known for their business-friendly court systems, have not seen a significant increase in corporations. Firms are instead incorporated in their home states.

Elon is extremely influential in the tech community and has put the full weight of his companies behind his push against Delaware (even saying his companies would no longer consider acquiring startups incorporated in Delaware). Earlier this year, he said any lawyer “still recommending incorporation in Delaware at this point should be sued for malpractice.”

But reincorporation requires a decent amount of legal work for a large company, and for a new incorporation, lawyers rarely deviate from a tried-and-tested incorporation process. Don’t bet against Elon, so they say.

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