One minute, you’re enjoying a high-dollar surf ’n’ turf meal in FiDi, the next, you’re being dragged away by snarling venture capitalists who want to eat your brains. You’ve just fallen victim to zombie VCs. But what are zombie VCs, and are they as rotten as they sound?
In the finance world, “zombie” firms are companies that still exist, but have only enough funds to cover operating costs and likely don’t have enough money to resolve their debts. That leaves these firms in limbo—like Night of the Living Debt, if you will. Zombie VCs aren’t necessarily doomed to linger on the Earth forever; some just haven’t reached their potential, especially in this era of plunging tech stock.
Some startup investors are warning of ongoing zombification in the venture capitalist world, given today’s high interest rates (since it means higher borrowing costs for them). It’s, ahem, not a great time for private equity financing.
Fortunately, going zombie mode may not always be the kiss of death for VCs. Per a 2018 study, a zombie company has about an 85% chance of staying a zombie year over year, so there’s…a chance of survival. Either way, if you see a venture capital staffer eyeing your head like it’s a T-bone steak, run the other way.
