An interesting discussion with Jon Bradford about the absence of tech IPOs in US in the first quarter of 2016 has got us thinking. This is surely the first empty quarter in a decade.

The quarter [Q1 2016] will not have hosted a single IPO from the information technology sector. It also will be bereft of any traditional corporate issuers backed by private equity. Fortune.

The challenge is simple - the private market pre-IPO rounds are overpriced, limiting the ability for institutional investors to make a return.

Tech IPO drought is sign of investor reality check. CNBC.

Over pricing has been the case for a year and signs of a serious investor reality check, with significant implications:

• Capital market valuations are down circa 40%, meaning companies need to grow into & beyond their value;
• Pre IPO Boards need an additional two quarters of sustained growth to stand still let alone improve value; and
• They will have to become increasingly more efficient & optimised in growing because SaaS growth demands capital – regardless.

So that's what they're all focused on. And rightly so.

The pre IPO investor needs to make a tough call:

1. Recapitalise the business themselves (with others privately);
2. Recapitalise via the public markets now (& take some money off the table) possibly making it a wasted bullet; or
3. Pinning their ears back, being more efficient, growing into the value, optimising the capital & the cash runway.

My view is they are having to do all three regardless!

There are signs these corrections and also changed behaviour within the so-called Unicorns is already taking effect with better than results from both Box and Square.

Most institutional IPO buyers, however, are long-term investors. And if Box and Square ― two much-maligned “unicorns” ― are making a credible case that reality is beginning to catch up to the hype, than it only should help encourage other privately-held tech companies to move forward with their own public listings. Fortune.

Nevertheless - more down rounds, bridges, firing, hiring, trade sales & M&A are on their way; all the way down to the very earliest seed and “Series A” funded start-ups.

Bear in mind that pre IPO SaaS companies will be burning more than $10m per quarter - that's a lot of juice to optimize - or get fatally wrong.