Tech does well enough in most economic periods in the US. But ZIRP was like the juicing era of baseball homerun record setting. The valuations, and therefore l

Tech does well enough in most economic periods in the US. But ZIRP was like the juicing era of baseball homerun record setting. The valuations, and therefore level of employment and particularly the compensation all got very distorted and is slowly coming down. Why? Interest rates are the cost of money. If money doesn't cost anything/much, you don't have anywhere else to park money, and you can take longer bets! VC funded startups going a decade with no revenue or no profit is something you can tolerate in that environment. What else are you going to do, put the money in a bond paying 0.5%? After a decade your $100 is now.. $105 in nominal terms, and a loss in real inflation adjusted terms assuming essentially any inflation. So you gamble that 5% of the 100 companies you invest in will be worth 25-50x what you invested, in 10 years. You end up with $125-150 in nominal terms after a decade for every $100 you started with. A lot better than $105! It is 5-10x the safe return. Now, when you run the math again with available no/low risk investments yielding 4%, you suddenly need a much higher hit rate and/or much higher return. Simply putting the money in a 4% yield for 10 years gets you $148, the top end of the prior ZIRP era VC return example.. uh oh! So what do you do, as an investor who still wants to get paid for taking VC risk? To get 5x the safe bond return, you need 25% of your book to return 25-50x, or 10% to return 62.5-125x, or 5% to return 125-250x. Everything is much harder and you need more of your investments to work, and for the ones that work to return far more. So tolerance for profitless unicorns for a decade is dramatically reduced.