Ride-hailing company Lyft is leading a parade of Silicon Valley companies to Wall Street that display an unusual quality: lots of red ink.

With its initial public offering expected this week, Lyft will serve as one of the biggest tests of the public market’s appetite for money-losing companies since the dot-com era.

Lyft last year posted a loss of $911 million, more than any U.S. startup has ever lost in the 12 months leading to its IPO, according to S&P Global Market Intelligence. Lyft’s loss, in the sixth year since its founding, could soon be eclipsed by 10-year-old Uber, which has been losing more than $800 million a quarter. Uber plans to go public later this year.

Many other highly funded startups with a propensity for heavy spending similar to Lyft and Uber are also considering public markets as they age. WeWork. reported its loss through the first nine months of last year quadrupled to $1.2 billion. The office-space company has indicated it intends to go public but hasn’t said when. Many food-delivery companies that have raised billions collectively are enduring heavy losses as they fight each other for market share, investors say.

Some companies moving toward an IPO are closer to a profit. Image-search company Pinterest on Friday disclosed in offering documents it halved its loss to $63 million in 2018 from the prior year. Data-analytics company Palantir has said it is expecting profitability in the next year or two.

Heavy losses and big spending on marketing have been made possible to a large extent by the seemingly endless supply of private capital keeping many startups afloat, as long as they show promising revenue growth. However, big risks can accompany big losses, analysts and investors say. Investors can easily misjudge the depth of demand for a popular new product, for instance. Also, none of the startups formed over the past decade have seen how their businesses perform in a recession.

“Many of their business models have not been tested fully,” Ilya Strebulaev, a Stanford University business professor who studies late-stage startups, said of the large private companies. “I would not be surprised if many of these companies would not be as successful as investors expect them to be.”

Of the five companies with the largest losses before an IPO, four of them — discount marketplace Groupon, biotech Moderna, social-media company Snap and communications company Vonage — have performed poorly on the public markets. A fifth, Viasystems, went private years ago at a fraction of its IPO value.

For investors betting on the coming IPOs, the main appeal is rapid growth, which Lyft has made a centerpiece of its push to Wall Street. Its revenue doubled last year to $2.2 billion in what would be the third largest annual revenue of a U.S. startup pre-IPO, behind Facebook and Google, according to S&P. Both Facebook and Google were profitable before their IPOs.

Lyft hasn’t publicly outlined when it hopes to turn a profit, but company executives and bankers point out that spending on high-cost items like marketing is falling as a percentage of revenue. It is also pushing to reduce insurance costs.

Bankers have found very strong demand thus far from investors at Lyft’s target valuation of between $21 billion and $23 billion, people familiar with the matter said. Lyft was last valued at $15.1 billion by private investors in a funding round.

The giant losses at both Lyft and Uber are largely due to their battle for market share. The companies initially operated with thrift in mind; they are online marketplaces connecting drivers and riders and own no vehicles. But competition has driven them to spend heavily to recruit new drivers and riders, subsidizing rides for consumers for nearly a decade.

Lyft reported spending $1.3 billion on marketing and incentives for drivers and riders in 2018, which averages out to more than $2 per ride. Many Lyft and Uber investors say they expect the incentive war will end once these companies go public because they won’t be constantly raising capital. Still, early private investors say they had hoped heavy rider subsidization would have ended years ago.

Lyft and Uber will have each raised more venture capital than any U.S. startup that has ever gone public, according to Dow Jones VentureSource. Private investors have largely bet that new services and products can rapidly spread around the globe given the ubiquity of the smartphone, and they generally, given the competitive environment, have been more tolerant of losses piling up as long as there is revenue growth.

“We find ourselves in a liquidity surplus,” said Doug Leone, a partner at Sequoia Capital, an early investor in Google, Apple Inc. and Instagram. “Companies have to run very fast given local and global competition.”

Similar dynamics were widespread during the dot-com boom, although that era’s private investors didn’t have to wait as long for startups to become profitable.

Amazon, for instance, raised only about $8 million in venture capital before going public in 1997, when it posted a $31 million loss. It posted its first quarterly profit in 2001, seven years after its founding. Google raised $25 million and had a profit of $106 million in the year before its 2004 IPO.

Still, other companies like e-commerce flops eToys and Pets.com went public on very little or no revenue — a distinct difference from today.

Even one of the dot-com bubble’s biggest busts, online grocer Webvan, was smaller by today’s standards. Between 1997 and 1999, Webvan raised one of the largest funding hauls of the era — $700 million in venture capital and IPO funds, or over $1 billion adjusted for inflation — only to shut down in 2001 when financing ran dry. Lyft, by contrast, has raised nearly $5 billion and is seeking another $2 billion in its IPO.

Kevin Czinger, Webvan’s former chief financial officer, said despite the frothy markets, investors wanted profits soon and wouldn’t tolerate years of large losses. “It would have been totally impossible to have these types of business plans,” said Czinger, who is now CEO of vehicle manufacturing startup Divergent 3D.

For investors betting on the coming IPOs, the main appeal is rapid growth, which Lyft has made a centerpiece of its push to Wall Street.

The Lyft logo on the windshield of a car.

Patrick T. Fallon, Bloomberg