It's difficult to compete with a company that sells at a loss. Oversupply and non-economic operations means that investors soon realize that many and probably most of the competitors in these overcrowded markets will not survive. Most are not. Unload while you can. The bubble bursts.
Stock prices plummet.
New venture funding becomes nearly impossible to find. Back to alternative four, profitability. The businesses with their goals set on early profitability and positive cash flow are relatively immune to the changing whims of investors. Their biggest problem is surviving the period when heavily funded competitors operate at a loss, effectively subsidizing each customers' purchases. The good news is that Dot-Com Winter is only an investment crisis, not a revenue crisis.