It's simple really. If the VC's don't move the money, then it's dead money to them. These are calculated risks that they absorb under the premise of regret minimization. They don't really have a choice but to take occasional losses. It's nearly intentional.

Zunicorn

Zune-icorn?

Zombicorn!

I know of some actual in use Microsoft Zune that have outlasted many companies that were predicted to become unicorns.

2015 era VC isn't aging well

This will only get worse as the AI bubble pops or cools and generates a ton more AI zombicorns too.

It really sucks for employees as their equity stake gives reason to stick around if there’s a good exit, but as every day passes odds increase that either the company goes bust or gets sold in some aqui-hire or salvage sale that gets investors something back but tends to leave employee shareholders with nothing.

There are post IPO tech zombies as well. Companies that IPOed and aren’t at serious risk of bankruptcy as they have cash, but aren’t profitable and nothing they seem to do changes the trajectory of the company. They could coast for years to come just slowly burning cash but have no clear prospects either to be anything more than a has-been just coasting along the train of irrelevance.

Quick warning that finance bros call any healthy company that isn't on an extreme growth path "zombies". In VC eyes they're "undead" because that big fat exit is not likely to come, but actually in reality many of these are perfectly healthy companies doing fine. The journalist who wrote this clearly walks in the same circles cause they're happy to call healthy companies that are alive and kicking, serving their customers, creating jobs and so on, "zombies".

That's not to say that surely there's also plenty of once-unicorns which really are borderline bankrupt, and that lots of these companies were extremely overvalued and VCs made bad deals in the ZIRP. But the term "zombie" is a derogatory anti-entrepreneur term invented by VCs who try to encourage founders to "go big or go bust", quietly disregarding the huge incentive mismatch they got. Because unlike the VCs, the founder has all their eggs in one basket.

If you think it's haunting Silicon Valley, wait til you see what's on the balance sheets of Private Equity, which holds these and many, many more overvalued companies!

So, series h, i, j companies are worthless?

children of the zombie corn