9 min read · 1,322 words
At a glance
- Walking dead portcos are identifiable two quarters before their next raise stalls. The early signals are relational and structural, not purely financial.
- Twelve signals matter, grouped into three buckets: deck drift, decision drift, and cash drift. Three or more live signals means the portco is on the walking dead track, whether the CEO has named it or not.
- What to demand when you see it: a Three-Path Model on the next five material decisions, a rewritten board pack that leads with decisions rather than variance, and a 14-day Diagnostic that either surfaces $22.5K+ in forward-reallocation potential or confirms the company is leaner than its peers.
Who this is for
This piece is for the board side of the table. VC operators who own portfolio support. Independent directors who want a sharper set of questions. LPs who want to know whether a GP is running a portfolio or managing a mortuary. If you are a founder, the other three pillar pages on this site will serve you better; this one is deliberately written for the people who sit across from you at the board table.
The goal is a shared field guide. If one of us sees the pattern, the other one should be able to verify it inside a quarter, not a year.
The 12 signals, grouped
Deck drift (what you see at the board meeting)
- The deck got 30% longer in the last two quarters. More slides, more tabs. Nothing sharper.
- The “strategy” section got shorter, and the “progress” section got longer. Progress on what was decided six months ago. Strategy for what gets decided next quarter. When the ratio flips, decisions are deferring.
- The forecast is a straight line from the last actual. No scenarios. No downside case. Or three scenarios so tightly clustered that they deliver the same decision.
- The ask is “more time,” not “a decision.” Bridge financing. Slower hiring. Delayed launch. The CEO is asking the board to wait, not to pick.
Decision drift (what you hear in conversation)
- The CEO can name ten priorities and cannot rank them. Not a sign of ambition. A sign the decision function has stopped sequencing.
- The lead investor and the CEO tell slightly different versions of the company’s story. Not contradiction. Drift. If the two narratives diverge more than 15%, the board has been softening its questions and the CEO has been adjusting the answer.
- Pricing, ICP, or geography “will be revisited next quarter” for the third quarter in a row. Material decisions that perpetually defer.
- The CFO produces variance. The CFO does not produce Three-Path Models. Board packs that explain the last quarter, board conversations that do not resolve the next one.
Cash drift (what the numbers show)
- Burn multiple between 2.5 and 4.0, drifting up. Below 2.5 means the capital is working. Above 4.0 means the company is a special case. In between, drifting up, is walking dead.
- Net revenue retention at 105 to 115%, with gross retention under 85%. Good NRR with weak GRR means a small number of accounts are carrying the number and most new customers are churning.
- DSO over 45 days on an annual-invoice customer base. Working capital drifting. Cash conversion getting softer.
- SaaS, cloud, and vendor spend growing faster than headcount for two quarters running. Complexity creeping faster than the team can absorb.
How to read the grid
- Zero or one signal: the portco is not walking dead. Move on.
- Two signals: early warning. Watch next quarter. Ask one sharp question at the next board meeting.
- Three to five signals: walking dead track confirmed. The raise will stall two quarters out if nothing changes. Intervention appropriate.
- Six or more signals: the raise will not close at the current mark. Decide now whether to push, write down, or recap.
Every GP has a portfolio-review template. We built ours around this grid because it surfaces the track earlier than the post-miss review does.
What to demand when you see it
There is a reluctance on the board side to intervene. The intervention looks like distrust. The language for it is uncomfortable. The alternative is a stalled raise, a down round, or a write-off two quarters later.
Four asks that carry the intervention without the drama:
1. A Three-Path Model on the next five material decisions
Not a strategy slide. Not a planning session. A one-page document for each of the next five decisions, modeled as Keep, Kill, Restructure, with dollars attached to each path and a recommended path signed by the CEO. Request it. Set a date. Review it at the next board meeting.
This is the single most effective intervention. CEOs who can produce five good Three-Path Models are not walking dead. CEOs who cannot are the ones who most need the exercise.
2. A board pack rewrite
One page of variance. Four pages of decisions. Every board pack for the next two quarters.
If the CFO cannot produce that format, the CFO has gone retrospective and the company needs a temporary or permanent intervention at the finance function.
3. A cash-recovery audit
A scoped audit of the eight recovery categories: SaaS, cloud, R&D credits, AR, vendor terms, revenue leakage, headcount, G&A. Two outcomes are acceptable:
- $22.5K+ of forward-reallocation potential is identified in 14 days, in which case the company captures it and the Diagnostic paid for itself at 3x.
- Less than $22.5K is identified, in which case the Diagnostic fee refunds in full and the board has a defensible lean-ops story for the LPs.
Either outcome is useful. Both foreclose the “we think we’re efficient” answer that covers too much.
4. A 90-day trajectory read
Written by someone who is not the CFO. The format is specific: what are the three decisions the CEO has not yet made that, once made, change the company’s trajectory? Why haven’t they been made? What is the cost of another 90 days of not making them?
That document goes in the board book at the next meeting. It is not a pitch. It is a diagnostic.
The Portfolio Walking Dead Scorecard
This is the tool we built for GPs and independent directors who want to run the 12-signal grid across the portfolio. It’s a spreadsheet with one row per portco, the 12 signals as columns, a visual rollup tab, and notes on which portcos have moved into or out of the walking dead track over the last two quarters.
Download the Portfolio Walking Dead Scorecard
Scorecard is free. Email required so we can send updates when the signal list evolves.
What we do, and what we don’t
We run diagnostic engagements with portcos directly. We take a referral from a GP or an independent director the same way we take a referral from a founder. We do not take a side.
What we do not do:
- We do not report back to the GP about what we find in the portco. The engagement is with the portco. We will tell them the diagnostic outcome; they can share it with whom they choose.
- We do not “recommend action” to boards in the sense of a restructuring advisor. We run the methodology; the board decides.
- We do not broker recaps, secondary sales, or bridge financings. Different firms, different business.
What we will do on a call with a GP:
- Walk the 12-signal grid against a specific portco if you want a read.
- Discuss whether a diagnostic fits the situation.
- Share anonymized patterns we are seeing across comparable portcos.
Further reading: