• Some people invest just to cash out later and hope the valuations will rise
  • Sometimes, 1 billion valuation isn't profitable

    • For the first two years, it doesn’t matter whether a company is profitable when it IPOs

    • The companies that were profitable upon IPO were up an average of 160%

    • The companies that were unprofitable upon IPO were up only 39%

    • Unwritten rule where private companies will be required to have five quarters of profitability

    • Many “unicorns” have reached the status solely because the funding markets have said so.

    • Too many businesses get started without any thought about achieving profitability, and

    • They are siphoning funds away from very good businesses that DO have a legitimate chance of being profitable. Worse yet…

    • The valuations get pumped up in the beginning of the cycle, and…

    • Money-losing companies IPO, and…

    • Money-losing companies do significantly worse than profitable companies. Read (How Important Is Profitability For Tech IPOs?), and…

    • Eventually the bubble bursts and valuations crumble, so…

    • Unsuspecting entrepreneurs and retail investors are left holding the bag.