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> at some point in their process they borrow money I would be somewhat careful with such claims. As an investor who has money available, you have two options
by q-big 4y ago
> at some point in their process they borrow money
I would be somewhat careful with such claims.
As an investor who has money available, you have two options (in this example) where none involve borrowing money:
a) invest in some startups
b) lend this money to other entities
Increased market interest rates mean that b) becomes more attractive. In other words: the startups that you invest in for a) have to be much more promising than in a market environment with lower interest rates. This means less investing in startups.
- yunohn 4y agoSure, but we’re talking about a VC fund. I’m not convinced that YC reduces investing in startups to pivot and profit from increased lending rates.
- q-big 4y agoA VC fund will only get money if the risk-adjusted rate of return is greater than the rate of interest; otherwise backers of the VC fund invest their money elsewhere. This means that VC have to become more selective with respect to the startups that they invest in, as I described.
- Spooky23 4y agoYC is qualifying and preparing startups for VC. If the funnel is narrowing at the end, it doesn’t make sense to put more companies into it.