A fact that will alarm many people but is nonetheless true: startup valuations are bets by professionals that the actual value of the company is significantly higher.
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Isn’t it that the future value will be higher, not necessarily the actual current value?
If interest rates were higher that distinction might start to matter, but it's rounding error now.
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The cost of capital for vc, stated differently, the minimum rate of return expected by LPs is tied to the F-funds rate (like everything), but it’s still high (20%+ on average), no?
Thanks. Twitter will use this to make your timeline better. UndoUndo
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I didn't understood, Can someone please explain the correlation?
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if you know the value of something is going to be $10 in a year, even if it's selling for $1 now you'll still buy it for $8 because you'll be able to make a profit a year from now. But if interest rates are high you might want to put your money in the bank instead
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