This is a consequence of money getting more expensive. When rates are low, investors pile money into non-revenue producing startups in hopes that something will return 1000x. Now rates are up and the smart money is moving elsewhere.
> Now rates are up and the smart money is moving elsewhere.
That would only explain drops in future investments, but we're seeing profitable companies with astronomical revenues from their cash cows diving into a massive firing spiral.
More importantly, growing interest rates is not exactly the definition of a downturn.
In terms of people deciding to invest in a company, high interest rates definitely make future revenue less valuable in terms of discounted cash flow models.
Growing interest rates propagate throughout the economy. The goal of higher interest rates (aside from debt & borrowing becoming substantially more expensive) is to bring down demand and slow the economy.
