You can get 4% on treasuries. It’s amazing how the whole startup game and VC ecosystem doesn’t absolutely trounce that considering the risk and effort everyone is applying.
People want to make money while being at the helm of stuff.
Being the responsible person at a company is some weird mix between being a painter, a father, a helmsman and the leader of a battalion/cult.
Investing in treasuries on the other hand is very depressing considering that it doesnt give you any authority or ability to call the shots in the organization you are investing in (except for voting of course, but everybody can do that)
In places which are up enough on the Maslow pyramid startups and sports teams will always get equity financing regardless of interest rates, because they aren’t just a business, it’s something people do to find purpose.
And actually the real reason for Fed lowering interest rates is to allow people to finance their dreams via debt in order to get the best of both worlds: cheap financing and not having to part ways with equity and not having to share the helm of the company with anybody else.
It’s an anomaly that all that resulted in the explosion of VC/PE. Mostly because both people and banks were scared AF by debt post 2008 even though with low rates it was the moment to be bold not scared. Those who weren’t financed their dream very cheaply and retained control of it.
