[downandout]

Given the level of investment here, I have to hope that there is much more to this company's model than is discussed in the article - otherwise this is a 100% guaranteed loss for investors. When that loss happens, it will be bad for any other tech startups that try to raise money after it.

The money actually being used to fund this black hole is coming from large institutions that trust the judgment of the VCs and usually have no say in the funds' investment decisions. Tech valuations are only high at the moment because there is currently an imbalance of investment capital chasing private tech deals. One sure way to correct that imbalance is for VCs to betray the confidence that institutions are placing in their judgment by blowing hundreds of millions of dollars in massive, obvious blunders like this.