Ask HN: Why can't VCs short startups?

Textbook market theory says that the ability to short sell or otherwise bet against a security is essential for appropriately quick downward price adjustments. This mechanism seems to be missing from venture capital, despite the great incentive that the large number of very bad companies creates.

One specific example is that many major investors were highly skeptical about Theranos well in advance of the publications that exposed them. Why were they trading in private markets at such a high valuation when those skeptical investors could have been betting against them?