"Then there are rising interest rates. Besides possibly triggering a downturn, they reduce the present value of tech companies’ profits, most of which lie far i

"Then there are rising interest rates. Besides possibly triggering a downturn, they reduce the present value of tech companies’ profits, most of which lie far in the future." This is key. If you have a 10 year horizon for your startup investments, hoping that one in 100 will become the next Amazon or Google, you're going to discount those future cashflows into todays dollars by applying an interest rate connected to current reality. If the base interest rates have skyrocketed, then the net present value of that future cashflow is way less. It's mentioned briefly in the article, but I wanted to unpack it here because it's a key reason that high inflation makes investment in startups far less attractive. "It would be wrong to compare the current tech slump to the bursting of the dotcom bubble two decades ago. Back then companies had neither healthy balance-sheets nor promising business models." I disagree with this. I'm not going to call out specific public companies, but there are many with no Price/Earnings to speak of because they are running at a massive loss. These companies are highly speculative investments and have yet to prove that they can turn a profit. It's not hard to generate revenue growth of 30% per year while running at a 20% loss. Creating a truly profitable company is hard, and much of the reason why these companies are listed on public markets is because early investors wanted to cash out by selling their stock to the public, rather than bear the risk of finding out whether the business can turn a profit. Many of these never-been-profitable companies have eye-wateringly high valuations based on multiple of revenue. We've seen 10x to 25x revenue in the past few years, while losing money hand over fist and never having proven they can ever turn a profit and become self sustainable. Just like the dot-com era, these folks are world class at creating the right optics and making the right noises on quarterly investor calls. But at the end of the day, creating a business that makes more money than it spends is what it's all about, and that is very difficult to do. These never-profitable businesses have been benefiting from the era of free money, and as that time ends, so will they.