It's been standard operating procedure in several high tech industries like biotech for decades. The FDA doesn't allow anyone to charge for anything related to

It's been standard operating procedure in several high tech industries like biotech for decades. The FDA doesn't allow anyone to charge for anything related to medicine or medical devices until a premarketing application is approved so many biotech companies (if not most, since anything profitable pre-IPO is generally gobbled up by pharma) IPO with zero revenue and their success or failure is entirely dependent on a few binary decisions made by government agencies which ostensibly depend on the strength of the science. It depends heavily on industry dynamics; in biotech it's not a problem since "product-market fit" is essentially predetermined and there are very few "customers", which are limited to private/public insurers representing patients and pharma companies looking to grow their stock value. In software there is a lot of capital sloshing around because the vast majority of it goes towards payroll which can be scaled up or down on a whim and many times the return on an investment depends not on dividends from profits but acquisitions by other companies looking to move their own stock price (the public version of an acquihire). There's the additional factor that many tech companies have network effects that form semi-monopolies which can be an order or two of magnitude more profitable than competitive industries. You won't find the same level of unprofitable IPOs in resource extraction, for example, which is subject to the whims of governments, fluctuating prices, and requires massive up front investments. Most of the excess capital goes towards hedging the aforementioned risks so dividends from profit is how money makes its way back to investors. Unprofitable IPOs only really happens when some company signs a big deal for mineral/resource rights with a government and spins off a separate company to raise money to exploit that deal without diluting the main company. If the government is considered reliable to investors, its perfectly normal to throw money in.