The startup market is the one of the most speculative parts of the economy. The value of a startup is overwhelmingly determined by the level of optimism about the future, as valuations invariably assume massive growth potential.

We have begun the transition from the part of the cycle with mania (where valuations assume virtually impossibly bright futures) to a more depressed view where estimates of the future are worse than the present, rather than absurdly better.

This destroys valuation for startups really, really fast.

The party is ending for the unicorn that has no strategy for ever becoming profitable, and those unicorns will probably roll up and die or get acquired on the cheap by companies that actually have business models.

This happens from time to time, and it's very healthy (though it feels really shitty to live through). You can see all around signs of the lavishness of the unicorn lifestyle, utterly detached from any notion of actual value created.

The party seems to have just ended. We'll see, the music always might start up again. But I wouldn't bet on it, and, apparently neither are VCs.