If you look at the statements for a VC fund, you'll see at most 2-3 winners that provide huge returns, and another 42 zombies (returned between 0x and 3x), which have little impact on the fund overall.
That's 42 tedious board seats, and 3 enjoyable board seats.
Ask a VC, they'll say the problem is that limited investors tend to call portfolio CEOs at random, and ask for a reference. That's pretty much the only reason that they need to pay attention to the zombie companies. And that's why a company that shuts down is better than a zombie that just keeps living without growth. One less board seat to deal with. One less set of arguing founders. One less VP they need to help recruit.
Great points - also, since you have one less company, the VCs now have relationships with a bunch of potential new employees for their other companies.
If you look at the statements for a VC fund, you'll see at most 2-3 winners that provide huge returns, and another 42 zombies (returned between 0x and 3x), which have little impact on the fund overall.
That's 42 tedious board seats, and 3 enjoyable board seats.
Ask a VC, they'll say the problem is that limited investors tend to call portfolio CEOs at random, and ask for a reference. That's pretty much the only reason that they need to pay attention to the zombie companies. And that's why a company that shuts down is better than a zombie that just keeps living without growth. One less board seat to deal with. One less set of arguing founders. One less VP they need to help recruit.