When missing skills kill the deal: evidence from venture capital write-offs

Purpose This paper investigates whether skill gaps in portfolio ventures influence the likelihood of write-offs when ventures are backed by well-qualified venture capitalists, contrasting the VC value-adding perspective with the venture absorptive capacity perspective and examining whether VCs' ability to convert uncertainty into risk moderates this relationship. Design/methodology/approach Using human capital and absorptive capacity theories, we provide evidence that insufficient absorptive capacity undermines the mutual value creation process between investors and investees. Empirically, we analyze 460 European VC managers from the 2023 EIF VC Survey. Findings Perceived skill gaps in portfolio ventures significantly increase the likelihood that VCs exit via write-off. This effect is stronger for more experienced investors, who more quickly recognize non-viable trajectories. Research limitations/implications Evidence is based on self-reported perceptions of investee skills and cross-sectional data, which constrain causal inference. Future research should match survey responses with deal-level performance and founder skill metrics. Practical implications Founder human capital is both a value driver and an exit trigger. Assessing teams' ability to internalize investor guidance becomes central to portfolio monitoring, capital allocation and LP governance expectations. Social implications Ventures lacking managerial and technical capacity are more readily abandoned, potentially amplifying regional or demographic inequality in entrepreneurial ecosystems. Policy attention to founder capability-building is therefore warranted. Originality/value We shift attention from VCs' value-adding role to ventures' capacity to absorb that value. We link skill deficits to investor write-offs and show that experience sharpens this governance mechanism.