The higher central bank interest rates is affecting Future discounted cash flow and valuations startups. I wrote a blog entry about it last year where I predict

The higher central bank interest rates is affecting Future discounted cash flow and valuations startups. I wrote a blog entry about it last year where I predicted a lot of non profitable startups would be effected about it. The king without clothes fairy tale of startup unicorns is starting to hit reality of financing capital at high interest rates. Many startups have not had sound viable business models which yields black profit numbers but have instead run on red minus numbers year after year. Due to very low interest rates it has been too easy to start new companies. Thus many startups have been started without viable business ideas. The startups have been funded by venture capital, venture capital have calculated on future discounted cash flow when valuing the investments. Now that central banks are raising interest rates to fight inflation the higher interest rate will effect venture capital firms calculations. Venture capital uses future discounted cash flow. Now central banks artifically altered the interest rates by quantive easing which forced interest rates lower than the natural market yield. “Application To apply the method, all future cash flows are estimated and discounted by using cost of capital to give their present values (PVs). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value of the cash flows in question;[[1]](https://en.wikipedia.org/wiki/Discounted_cash_flow#cite_note-1 https://en.wikipedia.org/wiki/Discounted_cash_flow#cite_note...) see below.” source: https://en.wikipedia.org/wiki/Discounted_cash_flow https://en.wikipedia.org/wiki/Discounted_cash_flow According to the investopedia article four values are among other used to value startups: * Cost-to-Duplicate * Market Multiple * Discounted Cash Flow (DCF) * Valuation by Stage. source: https://www.investopedia.com/articles/financial-theory/11/valuing-startup-ventures.asp https://www.investopedia.com/articles/financial-theory/11/va...