How should a fund ops team find out a portfolio company has quietly shut down, and book the write-off in the right year?

Q: What are the early signs that a portfolio company has shut down?

Silence comes first: no investor update, no reply to a data request, no board deck. Then the public signals follow: the careers page empties, founders change their titles, the website lapses and the state marks the entity void or dissolved. One signal means little. Three together mean you should ask the founder directly.

Q: Should you write a company down to zero before it formally dissolves?

Often, yes. Your fair value mark and the tax loss follow different rules. The mark should reflect what the position is worth at the measurement date, so a company that has stopped operating can go to zero before the paperwork is done. The realized loss and the tax deduction usually wait for evidence like a dissolution or an abandonment.

Don't wait for the founder to tell you. Give every position a last-heard-from date and review anything that's been quiet for two quarters. Check the cheap public signals: website, careers page, founder titles, state filings. When a company looks done, get the paperwork before December 31, because a worthless-stock loss belongs to the year it happened.

I hear some version of this story on calls with fund ops people more often than I'd like. A company in the portfolio stopped operating. Nobody told the fund. Somebody found out much later, usually by checking a founder's LinkedIn on a hunch, and by then the tax year the loss belonged to had already closed. (The founder wasn't hiding anything. Shutting a company down is miserable, and the small check on the cap table is the last email anyone writes.)

Why this is more common now

Shutdowns are up. A law firm review of the market in September 2026 cited data showing more venture-backed companies have shut down this year than in any prior period on record, and most of them were founded in the cheap-money years of 2019 to 2021. Those are the vintages that sit in a lot of current funds as long-tail positions.

The long tail is also where information is thinnest. Small checks often come without information rights, so there's no board seat and no contractual duty to report. When a company like that winds down, it may never send a final update at all.

Missing it costs more than an awkward line in the LP letter. Your marks stay wrong, your audit evidence has a hole in it, and the tax loss may land in the wrong year.

What are the early signs that a portfolio company has shut down?

Silence comes first. The company stops sending investor updates, stops replying to data requests and drops off the board calendar. Then the public signals follow, roughly in this order:

Signal	What it suggests	How strong
No update or reply for two quarters	Something changed, maybe nothing bad	Weak alone
Careers page empties, job posts stop	Hiring freeze or wind-down	Medium
Founders change titles or start new roles	The team has moved on	Strong
Website or domain lapses, emails bounce	The company isn't paying its bills	Strong
State marks the entity void or forfeited	Taxes or annual reports unpaid	Strong, but slow
Certificate of dissolution filed	Formal wind-down	Conclusive
Asset sale or acqui-hire announced for nothing	Investors likely got nothing	Conclusive for most funds

One signal means little. A quiet founder might just be heads-down. Three together mean it's time to email the founder and ask directly, kindly.

The state filing is worth understanding. In Delaware, a corporation that goes a year without paying its franchise tax or filing its annual report has its charter declared void by statute. The state sends a warning by November 30, and the deadline is March 1. So a "void" status is a real signal, but it lags. It can also happen to a company that's still alive and just forgot to pay, so treat it as evidence, not a verdict.

Step 1: Give every position a last-heard-from date

This is the cheapest fix and the one most funds skip. For each position, record the last date you got something from the company: an update, a deck, a reply, a board meeting. Sort by it once a quarter.

Anything quiet for two quarters goes on a short review list. That list is usually short, a handful of companies out of the whole portfolio. Most of them will be fine. The point is to look on purpose instead of finding out by accident.

If you can, capture that date from where the communication already happens. Updates land in partners' inboxes, not in a portal, so the date should come from email and calendar automatically. A last-heard-from column that someone has to fill in by hand goes stale in about a quarter (I've watched it happen).

Step 2: Check the public signals for anything on the list

For each quiet company, spend five minutes on the public record. Check the website and careers page, the founders' current titles, any news and the state's entity search. Write down what you found and the date you checked it.

This step is a good fit for software, because it's repetitive and the signals change slowly. A tool can watch careers pages, founder titles and websites every day across the whole portfolio and flag only the changes. It shouldn't decide anything on its own. It should hand a person a short list with the evidence attached.

Step 3: Ask the founder, and ask for the documents

When the signals line up, write to the founder. Keep it short and human: you noticed the team has moved on, you're sorry, and you need to close out the position correctly. Then ask for the specific documents:

The board or shareholder consent approving the dissolution or asset sale
The certificate of dissolution, if one has been filed
Any final distribution or a statement that shareholders received nothing
The date operations actually stopped

If the founder can't or won't reply, keep what you have: the public evidence, the dates you checked it and the emails you sent. Your auditor and your tax adviser will both want that file.

When can a fund claim a loss on a worthless portfolio company?

Under US tax rules, a security that becomes wholly worthless is treated as if it were sold on the last day of the tax year in which it became worthless. There's no deduction for a security that has only lost most of its value. It has to be completely worthless, and the burden of showing when that happened is on the taxpayer, which in practice means an identifiable event like a dissolution or a liquidation.

That's why December matters. If the shares became wholly worthless this year and you can document it, the loss belongs on this year's return. Note that stopping operations isn't the same thing: if the company still has cash or assets that could reach shareholders, the shares aren't worthless yet. For a fund structured as a partnership, that flows through to the partners on their K-1s, which is exactly the paperwork you don't want to amend.

If you miss it, there is a backstop. The claim window for a worthless security runs seven years from the original return's due date, instead of the usual three. But that means amended returns for the fund and, often, for every partner. This is a question for your tax adviser, not for a blog post, and the rules differ outside the US.

Should you write a company down to zero before it formally dissolves?

Often, yes. The fair value mark and the tax loss follow different rules, and it helps to keep them apart.

Your mark should reflect what the position is worth at the measurement date. If a company has stopped operating and has no assets left for equity holders, a zero mark is the honest one, even if the dissolution paperwork takes another six months. Waiting for the certificate before you mark it down just means your NAV is wrong for two quarters.

The realized loss usually waits for the disposal itself: the dissolution, the asset sale or a formal abandonment of the shares. Investment companies typically book that as a realized loss and reverse the unrealized depreciation they'd already recorded. Your fund admin will have a view on the mechanics. Your job is to get them the evidence and the dates.

What this looks like in practice

None of this is complicated. It just needs a list that someone looks at on a schedule, and documents that someone collects before the year ends. The funds that do it well treat a shutdown like any other event on the position: it has a date, a type and a source document behind it, the same as a new round.

At Cura, we track last-heard-from from email and calendar and watch public signals like careers pages and founder titles across the portfolio, so the quiet companies show up on a list instead of in a surprise. A person still makes the call and asks the founder.