Why Your Business Partnerships Need Clearer Boundaries
You may not run a venture capital firm or sit on the boards of technology companies. But you probably work with suppliers, distributors, software providers, agents, consultants or business partners that also serve other companies in your industry.
That creates a practical risk: someone with access to your plans, customers or operating information may also be advising a competitor. A recent report says the United States Department of Justice is investigating venture firm Andreessen Horowitz, also known as a16z, over board seats involving companies that have become rivals. TechCrunch reported on the investigation and the questions it raises about conflicts of interest.
You do not need to wait for a government investigation to review your own arrangements. For a Malaysian SME, the more immediate issue is whether your business has clear rules about confidential information, competing engagements and decision-making authority.
TL;DR
A partner, adviser or investor can create a conflict when they work closely with both you and a competitor.
Review who can access sensitive information, document conflict rules and ensure important decisions remain under your control.
What This Means
A conflict of interest happens when a person or organisation has responsibilities to two parties whose interests may clash. In the reported case, a16z partners held board seats at companies that later became competitors as the businesses changed direction, particularly during the rapid growth of artificial intelligence. The article notes that Ben Horowitz sits on the Databricks board while partner Martin Casado sits on the Fivetran board. These board relationships were identified in TechCrunch’s report.
The difficulty is that competition is not always obvious at the beginning of a relationship. A software company may start by serving restaurants, then expand into retail. A logistics provider may begin handling domestic deliveries, then build a service for e-commerce sellers. Two businesses that were once different can gradually target the same customers.
Board members, investors and advisers often receive sensitive information. This can include product plans, customer lists, hiring plans, sales forecasts, supplier terms and expansion intentions. Even when nobody deliberately misuses that information, overlapping responsibilities can weaken trust and create questions about whether decisions are independent.
The practical lesson is simple: trust is useful, but documented boundaries protect both sides when business relationships change.
The report also raises a second issue: whether action against a large, visible firm could encourage closer scrutiny of other investment and advisory firms. TechCrunch quoted discussion that the investigation could set an example for smaller firms. The possibility of a wider effect on other venture firms was part of the article’s analysis.
How This Applies to Malaysian SMEs
First, review external advisers and investors. If you have an adviser who helps with strategy, technology or sales, ask whether they also work with direct competitors. This does not automatically mean you must end the relationship. You should, however, know what information they can see and whether they have agreed not to share it. For example, an adviser helping your Klang Valley food business plan delivery operations should not automatically receive the same level of detail from a competing restaurant chain.
Second, pay attention to shared technology and service providers. Many SMEs use the same accounting firm, digital agency, cloud software, logistics partner or customer relationship system. Shared service providers are common, but you should separate access properly. Your marketing agency may need product photographs and campaign dates, while your accountant needs transaction records. Neither necessarily needs access to your full customer database or internal pricing strategy.
Third, consider how your business may evolve. A partner that is not a competitor today may become one later. A wholesaler may launch its own private-label products. A software integrator may develop a similar service after learning how your workflow operates. A distributor may begin selling directly to your customers. The issue is not predicting every possible scenario; it is making sure your agreement explains what happens if the relationship changes.
Fourth, be careful when accepting board or advisory roles. If you or a senior employee serves on the board or advisory panel of another company, check whether that company competes with your own business. The same applies if you invite an experienced industry figure onto your board. Ask about their existing appointments and define which discussions they must leave because of a conflict.
Finally, keep sensitive information organised. If every supplier, consultant and part-time adviser receives the same shared-drive access, you may already have unnecessary exposure. A simple permission review can show who can view customer records, financial reports, product documents and operational data. This is a practical business control, not only a legal exercise.
A Simple Conflict Review for Your Business
| Area to review | Questions to ask | Action to take |
|---|---|---|
| Advisers and directors | Do they serve competing businesses? | Record other appointments and require disclosure. |
| Suppliers and agencies | Can they access information beyond their task? | Limit access to the specific files and systems they need. |
| Contracts | What happens if the partner becomes a competitor? | Include confidentiality, conflict and termination clauses. |
| Internal staff | Do employees have outside roles or side businesses? | Use a clear disclosure process and written approval rules. |
| Business changes | Has a partner expanded into your market? | Review the relationship whenever products, customers or territories change. |
Practical Takeaways
- Create a list of every adviser, director, investor, consultant and major service provider who receives confidential information.
- Mark which relationships involve customers, competitors, pricing, product plans or operational systems.
- Ask external partners to disclose relevant business roles and competing engagements.
- Use written confidentiality terms instead of relying only on verbal assurances.
- Give each external party the minimum system access needed for its work.
- Set a regular review date for key partnerships, especially when your company enters a new market.
- Define who makes final decisions when an adviser has a competing interest.
- Ask a Malaysian-qualified lawyer to review important contracts where board seats, investment rights or sensitive information are involved.
What You Should Document
A short conflict policy can be enough to create clarity. It should explain what counts as a competing engagement, who must disclose it, how confidential information is handled and who decides whether the relationship can continue.
You should also keep a simple register. Record the person or organisation, the role they perform, the information they can access, other relevant engagements and the date of the last review. This gives you a practical record if questions arise later.
Do not make the policy so complicated that nobody follows it. A two-page document that your team understands is more useful than a lengthy policy hidden in a folder. The goal is to reduce uncertainty before a problem appears.
The Bigger Picture
Business relationships are becoming more interconnected. One adviser may support several companies. One software platform may hold data for many businesses. One investor may have interests across an entire sector. At the same time, companies can change direction quickly as new technologies and customer needs appear.
The a16z investigation remains a matter involving a US government agency and a US venture firm, and the available reporting does not establish the final outcome. TechCrunch noted that important questions about the investigation and its outcome remained unanswered. For Malaysian SMEs, the value is not in guessing what regulators will do next. It is in recognising that overlapping business roles can create operational and trust problems even without official action.
As your company grows, your partnerships will become more important. The right question is not whether every partner works exclusively with you. That may be unrealistic. The right questions are whether the boundaries are clear, whether access is controlled, whether conflicts are disclosed and whether you can make independent decisions.
Start with one review this week: list the people outside your company who can see sensitive information or influence important decisions. Then check whether their responsibilities overlap with your competitors. That small exercise can reveal risks while they are still manageable.
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