---
title: "What Is Write-Off?"
term: "Write-Off"
description: "A write-off removes or zeroes the carrying value of an investment deemed unrecoverable — when a portfolio company fails, debt defaults, or assets are abandoned."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/write-off
---

# What Is Write-Off?

> A write-off removes or zeroes the carrying value of an investment deemed unrecoverable — when a portfolio company fails, debt defaults, or assets are abandoned.

**A write-off** is the accounting recognition that an investment has no meaningful recoverable value — the final mark when hope of return is gone.

### How it works

Venture funds anticipate write-offs — many seed bets return zero. Process:

1. Company [winds down](/glossary/wind-down) or bankruptcy concludes
2. Fund determines no likely distribution to equity
3. Carrying value set to zero (or residual cents)
4. Loss flows to fund performance metrics and LP K-1s where applicable

Partial write-offs happen when funds sell distressed positions for nominal cash or acqui-hire with immaterial proceeds.

Debt write-offs occur when lenders abandon collection after work-out failure. Venture debt write-offs hit both lender returns and founder reputation for future borrowing.

Write-offs differ from [write-downs](/glossary/write-down), which reduce but do not eliminate value while turnaround remains possible.

Power-law fund returns assume high write-off rates on losers — DPI comes from a few winners, not portfolio-wide success.

### Why it matters

- **Founders:** Professional wind downs reduce lingering liabilities; ghost companies on cap tables frustrate investors.
- **Investors:** Honest write-off timing supports LP relationships; zombie marks distort fundraising narratives.

### Common mistake

Delaying write-offs for years on dead companies — inflates TVPI and misallocates partner time to hopeless positions.

### Related ideas

See also [write-down](/glossary/write-down), [wind down](/glossary/wind-down), and [zombie company](/glossary/zombie-company).

## FAQ

### What is a write-off in simple terms?

A write-off is when an investor declares an investment worthless for accounting purposes — usually after shutdown, bankruptcy, or total loss — and stops carrying value on the books.

### Why does a write-off matter?

For investors, write-offs finalize losses and affect fund DPI and loss ratios. For founders, a clean write-off after wind down closes the chapter for cap table and investor reporting.


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Source: https://venturecapitaltracker.com/glossary/write-off