Nailed it. This is exactly what happened at the startup I was working for. I saw the writing on the wall and left, along with 2 other senior developers. Replaced by a set of fast-hire "interns"* that couldn't code. Then management started flip-flopping between a bunch of different projects with severe micromanaging: standups twice a day, constant focus on Jira metrics. Deadlines became very tight under monetization pressure from investors. Ultimately, the grand "2.0" version of the app that was going to save the company never launched, the series B was not raised, and the company fell apart.
*I say "interns" because they were actually full-time hires at 1/4 the price of developers.
Yes! Saw that happen. Senior people leave, management thinks, no worries, with their salary we can pay for 6 interns. We don't need those traitors / haters anyway. Next thing there are 6 interns there.
Not that interns are bad, they are great, I enjoyed mentoring and getting help from many during the years. It is when they are brought in to replace a senior devs that things might be getting a little weird.
One caveat is where I work we found the hiring pool to be an issue.
Senior Devs were usually only by title, and graduate Devs are much more plentiful, we slowly chopped out three seniors and replaced each with competent grad hires.
Turned out to be a much improved situation for everyone.
I can see how replaced ng good senior Devs with inadequate interns would be a bad sign though.
Sometimes a senior developer will leave and it's not an indicator at all. EG: the founding CTO was more of a coder than a manager and as the company grows you need a CTO who is more manager than coder - that is a tough bump. If the exit is clean/healthy with transition period and no hints of animosity then that's just normal events as a company grows and demonstrates resilience - yet still not comfortable.
Bluntly: the CTO who takes you from $0 => $5M may not be the one who takes you from $5 => $50.
Replace CTO with any other senior position.
However if multiple senior people are leaving with short notice then you should ask them where they are going.
Money problems (Travel cancelled, Free food/drinks stopped)
Drastically shorter deadlines.
They start hiring programmers who cannot code (Literally cannot fizzbuzz)
Rapid flip-flopping on projects couples with constant firefighting.
Starting to Micromanage developer time in intervals less than 1 day - (exactly 3 hours on X, exactly 2 hours on Y, exactly 3.5 hours on Z)