Dec 21, 2015 ยท 3 minutes

What’s the opposite of a Christmas miracle? The fact that the long-talked-about tech correction appears to be here.

Being a business reporter is all about following the money.

When you want to track a growing new trend-- like Web 2.0 and social media in the early 2000s for instance-- you follow the smart money. In that case, [Pando investors!] Reid Hoffman, Peter Thiel, Marc Andreessen, and others.

When you want to track a deflating trend-- like the over inflated “Uber of X” economy and all the other unicorns-- you follow the hot money.

Let’s look at the hot money: Fidelity and Blackrock have been marking down some of their most high profile investments, Tiger Global has announced a slowdown in deal making in India specifically, and CNBC reports that the secondary markets for nearly everyone has cooled way down.

Q High-profile consumer start-ups are feeling the pinch. Evernote and One Kings Lane are cutting staff, Rdio was acquired out of bankruptcy, Gilt Groupe is nearing a sale for a fraction of its peak valuation (according to The Wall Street Journal) and Dropbox shut down two products.

In the absence of IPOs, employees at highly valued start-ups are trying to sell some of their shares on the secondary market, but buyers are increasingly scarce.

Spotify prices have drifted below the last round ($8.5 billion valuation), according to Larry Albukerk, managing partner at EB Exchange Funds, which facilitates transactions. Dropbox engineers are struggling to find buyers as are employees at food delivery services like Instacart and DoorDash, Albukerk said.

Uber, Lyft and Airbnb remain "white hot" for investors, he said, but in general "there is less appetite on the buy side for secondaries."Q

Even CB Insights which noted in its third quarter funding report that despite all the talk of a cool down the numbers weren’t showing it, titled it’s most recent newsletter: Dear startups, winter is coming.

It’s not just the hot money. Seed deals started to constrict towards the end of the summer. Several seed investors told me they reduced their deal making by a given percentage, because the VCs were doing that and only the very best companies are going to make it through the funnel in the next few years.

Indeed, since the second quarter we’ve been living in a bi-furcated venture world: The amount invested has been increasing while the number of deals has been steadily declining. That means people started to pick winners some six months ago.

That some correction was inevitable surprises absolutely no one except perhaps Patrick Collison:

Poor Collison. I have a feeling this is one of those classic magazine covers that will come back to haunt everyone involved. Stripe in particular was valued at $5 billion in its last round-- lead by the same corporate investor that did Square’s overvalued deal. You know, the price that it’s IPO couldn’t match, let alone exceed. I can’t imagine it was Collison’s idea: Put my face on a cover saying all 140 unicorns are “actually cheap.”

Even protesters against the idea there’s a “bubble” like Andreessen have admitted there been a heady investing market and sooner or later, it’ll normalize and we’ll see who the real winners are.

Next year, a lot of companies are going to get pushed to this head. CB Insights has published its annual IPO pipeline today, and notes that there’s a new trend emerging where companies may get “dragged” to an IPO because-- like Stripe-- they’ve raised private money that were priced for absolute perfection. As the hot money leaves-- or simply realizes it can wait and get a cheaper price buying a forced IPO-- they’ll be forced to cut staff (as OneKingsLane, Evernote, and others have already had to) or go public before they are ready. And if the woeful exit climate doesn’t change, that’s not a position anyone wants to be in.

The average amount raised by the companies in the pipeline is $182 million-- up from $111 million last year. There were 92 mega rounds of more than $100 million this past year, up from 48 the year before. In aggregate there some $90 billion tied up in 531 venture backed companies that have to pay the piper at some point.

Hot money is all but gone. Corporate acquisitions have slowed, as no one wants to be the guy who buys a company at the top of the market. And the IPO market has been generally lousy. For 140 billion dollar companies, we’re about to see what the emperor's clothes are made out of.