The era of free money is now officially behind us: The United States Federal Reserve raised a key interest rate benchmark by 0.50%, or 50 basis points, this week.
Startups have long basked in the sun of effectively zero-cost money. As a result of a historic period of low rates, the comparative attractiveness of investing in bonds and other safer, if lower-yielding, assets was reduced, meaning investors around the world were looking for a place to park funds and have a shot at material incomes.
Technology did well during the period, with tech startups receiving an even larger shot in the arm. The mechanism is simple to understand: Low rates led to capital flowing into more exotic investments, like venture capital funds. Those funds then grew in size and number. The result of that inf …
