A write-off recognizes that an asset or investment has little or no recoverable value. In venture capital, investors may write off an old company investment as a loss rather than keep an illiquid holding. section 3.2
For a venture-backed CEO, the warning is practical:
- Track the fund’s age and plan an exit before investors reach the end of their roughly 10-year horizon. section 3.2
- Do not assume market progress will prevent a shutdown if investors need to close an old fund. section 3.2
NovaSoft’s unwelcome deadline
NovaSoft had improved its market position, but its venture investors shut it down after nearly ten years. Their funds were approaching closure, and writing off the investment could provide tax benefits while removing an illiquid holding. section 3.2
