Write-Off
When a VC marks an investment value to zero, effectively declaring it a total loss.
Definition
A write-off occurs when a VC fund reduces the carrying value of an investment to zero, acknowledging a total loss. This happens when a portfolio company shuts down, is acquired for less than the liquidation preferences (returning nothing to common holders), or becomes so impaired that recovery is essentially impossible. Write-offs are a normal part of the VC model; even top funds write off 30-40% of their investments.
Why it matters
If your company is written off by its investors, your equity is likely worthless. The VC power law means most returns come from a small number of huge winners, while many investments fail completely. This is the risk side of startup equity.
Example
A VC invested $8M in a startup. After 4 years, the company runs out of cash and cannot raise more. The VC writes off the $8M investment to $0. The company's stock options are now worthless for all employees.