Illustration by Jeremy Enecio for Fortune
By Adam Lashinsky
October 26, 2015

In March 2000, the financial weekly Barron’s published an infamous study under the headline “Burning Up.” It focused on scores of unprofitable Internet companies, specifically analyzing their “burn rates”—their pace of cash consumption until there’s nothing left–and presciently predicted the ugly result when capital raising turned difficult.

The screen turned up then-prominent and now-forgotten gems, including Intraware, drkoop.com, and CDNow.com. The Barron’s article also saw clearly that the dot-com bust would smack established companies because they sold to the soon-to-be ailing group. Barron’s specifically fingered Cisco Systems (CSCO), whose market value peaked that month at more than $550 billion. Today, at $150 billion, Cisco isn’t even one of the 10 most valuable publicly traded companies in the U.S.

There won’t be a similar bloodbath among public tech companies this time around for a simple reason: Too few startups have gone public. But the much ballyhooed cohort of highly valued private companies, the so-called unicorns, are heading for a fall every bit as dramatic as their hapless dot-com brethren 15 years ago. The culprit will be exactly the same, their burn rates.

Already we know that there’s a fair amount of monkey business in unicorn valuations, as I detail in the current issue of Fortune. Tech CEOs pursue a variety of gimmicks, including guaranteed IPO prices (which trigger share issuance if they aren’t met), cash dividends, and other preferential rights in return for ego-gratifying, recruitment-and-retention-stimulating billion-dollar labels.

There will be a critical difference this time in that there won’t be an authoritative study of how much time private companies have left. (Their cash-burn data are hard to come by.) But make no mistake. The companies and their backers know precisely when the money will run out, and fundraising already is becoming more difficult. Fortune’s Dan Primack has documented this trend as well as the real impact that a collapse among poorly funded unicorns will have. He noted that 91 such companies employ 57,000 people. The vast crop of unicorn wannabes employs many more.

Consider as well that businesses like Amazon’s (AMZN) “cloud” software and services provider Amazon Web Services—a darling of Wall Street today—base their success on selling to startups. Even they will be stung by the cascading effect of a unicorn burn-rate bust. It won’t be pretty.

This article first appeared in the daily Fortune newsletter Data Sheet. Subscribe here for a daily dose of analysis from Adam Lashinsky and a curation of the day’s technology news from Heather Clancy.

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