Well, it helps if the Wall Street underwriter has a popular stock analyst whose recommendation will push up the price. The best-known Internet analyst is Mary Meeker of Morgan Stanley Dean Witter. She was paid so much in part because she helped attract so much underwriting. Their pay depends on the firm's underwriting, which depends on enthusiastic research reports. Glum Internet analysts aren't wanted.
Capitalism is about risk and reward.
If there's risk, some people will lose. Business plans flop. That is not the issue. But to work, capitalism requires reasonably reliable information. If it's skewed, then the risk-reward equation becomes skewed.