In the US, you can deduct this as a "bad debt".
Since it's an investment, it is a personal bad debt, and as such it has to be totally unrecoverable. Personal bad debts are deducted as short term capital losses using form 8949.
See more information, and links to the relevant forms and instructions, here on the IRS site.
I missed a crucial word in your question... You invested time, and received notes in return for the time invested, not cash.
You can only deduct bad debt if you invested cash, or paid taxes on the notes when you received them. If you didn't pay taxes on the notes when you received them, then the debt is not deductible.