From the article: <i>"According to the WSJ, of the 48 venture-funded U.S. tech companies that went public since 2014, 35 now trade below their initial public offering prices."</i><p>The venture market has been running on the "greater fool" approach, assuming that stage N investors will be bailed out by stage N+1 investors. Instead, the last private equity stage is left holding the bag. Look at Twitter's numbers.[1] Twitter still isn't profitable, which is incredible considering the simplicity of the business.<p>From the startup perspective, the trouble with becoming profitable is that you're then evaluated as an operating company. Investors look at GAAP earnings, not growth or EBITDA ("earnings before all the bad stuff") numbers. Operating companies are usually valued around 10x earnings. (Apple is around 11 right now). On that basis, many of the "unicorns" have negative valuations. If you're stable and profitable but not hugely profitable, you can't get another round of funding.<p>[1] <a href="http://financials.morningstar.com/ratios/r.html?t=TWTR" rel="nofollow">http://financials.morningstar.com/ratios/r.html?t=TWTR</a>