Turns out it was more than the old pipes in my basement that froze this month.

The IPO market came to a screeching halt toward the end of 2015 and showed no sign of budging this year, either. A whopping total of zero companies went public this past month. One tried, but poor market outlook caused it to back out.

That’s right: zero public offerings so far this year.

Goose egg.

Nada.

However, it’s not as though 2015 was an IPO year to brag about, either. In fact, it was the worst year to date for IPOs. (Until this year, I suppose.) IPO pricings were on pace to exceed 200 offerings for the third year in a row until the stock market tumbled by more than 10% in August. The market activity in Q3 of 2015 was ominous enough to cause 17 companies to withdraw.

According to Renaissance Capital, which tracks offerings in the U.S., the number of IPOs slipped to 170 in 2015, down from 275 in 2014.

“It is questionable whether the IPO window is open for issuance at this point,” Kathleen Smith, principal at Renaissance Capital, told Fortune. “We don’t expect this to turn around on a dime. It will take time for investors to get confident again.”

The companies that did go public last year only raised a combined $30 billion in proceeds — the lowest amount since 2009.

Broken down by sector, it looks like tech IPOs were the biggest disappointment, merely raising a combined $4.2 billion over the course of the year despite such a large amount of hype circulating around them.

For comparison, remember that Alibaba’s (NYSE: BABA) IPO in September of 2014 raised $21.8 billion alone.

What does this mean for upcoming tech IPOs? (That is, if any should be so bold.)

As the technology market as a whole continues to evolve, so will the initial public offering market.

Change is Good

It just means that we’re seeing an evolution of the industry.

Over the past few years, we’ve seen the rapid rise of “unicorns” — privately funded companies whose market capitalization would exceed $1 billion if they were to go public. The population of unicorns is likely to increase further as innovators and investors look to develop new products, platforms, and services as rapidly as possible.

However, there are an increasing number of unicorns that are choosing to stay private longer (think: Uber).

Fear not, though: 2016 will not continue to be void of an IPO. However, the IPOs we do see will definitely be of a different nature that what you might be used to.

Hopefully, we can expect more sustainable business models. That is, if they learned anything from the past.

Instead of going public out of desperation, companies will (and should) go public when it’s healthy and smart to do so.

Consider Box, Inc. (NYSE: BOX), which went public a little more than one year ago. Share prices jumped 70% immediately after the IPO but proceeded to almost immediately drop below the $14 IPO price in the following weeks. The sell-off continued after the six-month insider lock-up, closing at a 52-week low of $9.40 earlier this month — exactly one year later (lackluster, to say the least).

(Box is probably regretting spending cash on all those fancy balloons.)

Box’s performance is not a reflection of cloud computing or even the tech sector as a whole. It is, however, a reflection of bad financials.

Within the first year, Box lost almost $150 million in cash flow. This is a significant problem for a company whose financial filings show a net cash balance of $167 million. To call this unsustainable is the understatement of the year.

I should admit that it’s not all bad. Box’s financials do show some positive signs — a decline in operating losses and continued revenue growth (which is also why I’m not saying it’s a bad company entirely, but that management should have reexamined the business strategy before leaping into the public market).

But that seemed to be the overall trend in 2015. Of the 37 companies that went public in the first quarter, only 10 are still profitable.

It signals a change in what it means to go public. An IPO once meant, “we’ve arrived.” It was a reason to get excited.

Now? Not so much.

There’s been a handful of failed tech IPOs in the past few years — Groupon (GRPN), Zynga (ZNGA), and others.

This trend should have investors practicing a little more scrutiny before assuming that “IPO” is synonymous with “profitable.”

Instead, IPO seems to be synonymous with “desperation.” 

Square (SQ) was forecast to disrupt the entire payment system.

Unfortunately, that technology failed to meet expectations and left investors disappointed.

Actually, Square’s IPO wasn’t just disappointing… it reeked of desperation.

Desperation is the only reason the company accepted such a low offering.

Square has been burning through cash so quickly that most analysts believe the company would have been bankrupt within two years without the IPO.

Square recently posted $131.5 million in losses, up from $117 million the prior year.

According to Deloitte Consulting, more and more technology companies with consumption-based business models (CBBMs) “need to think strategically about how CBBMs can drive future growth. Before evolving their business models, technology companies also must be prepared to manage near-term transition costs, which could be significant, and ensure that there is alignment and integration of key decisions.​”

Before you get caught up in the whirlwind of generated propaganda, be sure to do your research.

Has sales growth been outperforming other companies in that industry? Is the company gaining market share? 

IPOs can be exciting (they’re supposed to be), but investors — and directors — cannot ignore the fundamental principles behind a financially healthy company.

Until next time,

Jennifer Clark for Pro Trader Today