Tech IPOs face tough crowd with start-up fatigue

New York

EXPECT a resurrection of technology initial public offerings in 2016 as private fundraising options cool. But when it comes to valuations, it may not be pretty.

After a slow year for tech IPOs, market-bound companies will need to show profitability - in addition to lofty promises of sales growth - before investors are willing to pile into share sales the way they have in the past.

"Investor sentiment has changed for those kinds of companies," said Michael Goldberg, head of US equity capital markets at Royal Bank of Canada, of young IPO-bound tech companies. "They embrace growth but they want to see a path to profitability and to cash flow."

The backlog of closely held technology and Internet companies has piled up, with more than 144 valued at more than US$1 billion, research firm CB Insights said in a recent report. That US$1 billion mark turns private companies into unicorns, named after the mythical creature t…