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Y Combinator Cast

06/21/24

@ Y Combinator

There were three types of venture capitalists during the zero interest rate period: those who believed there was no problem, those who knew it was problematic but participated anyway, and a small group that chose to hold onto their capital.

Video

What Is ZIRP And How Did It Poison Startups?

@ Y Combinator

What Is ZIRP And How Did It Poison Startups?

06/21/24

Related Takeaways

Y Combinator Cast

06/21/24

@ Y Combinator

During the ZIRP period, banks had to find places to invest their money, leading to a surge in venture capital investments as they sought higher yields.

Y Combinator Cast

06/21/24

@ Y Combinator

During the zero interest rate period, many founders believed the favorable conditions would last indefinitely, despite warnings that the market would eventually correct itself.

Dalton Caldwell

10/23/24

@ Y Combinator

Venture Capitalists (VCs) invest small amounts of money to acquire equity in startups, hoping that a few will grow large enough to cover the losses from unsuccessful investments.

Y Combinator Cast

06/21/24

@ Y Combinator

The zero interest rate phenomenon led to unsustainable business practices, where companies that relied on cheap capital struggled when interest rates rose.

Y Combinator Cast

06/21/24

@ Y Combinator

Once interest rates began to rise again, many investors who had entered the startup space during ZIRP exited quickly, leaving behind a volatile market.

Y Combinator Cast

06/21/24

@ Y Combinator

The influx of capital during ZIRP caused many venture capital funds and family offices to dramatically increase their investment rates, as they had more money to manage and distribute.

Y Combinator Cast

03/09/18

@ Y Combinator

The emergence of venture capital firms in the 1940s and 1950s marked the beginning of a recognizable venture funding structure, with significant returns on early investments.

Kofi Ampadu

05/06/25

@ a16z

Venture capitalists can offer substantial capital, assist with hiring executives, and provide operational support, but they require significant equity and expect rapid growth to generate returns.

Marc Andreessen

06/11/25

@ Uncapped with Jack Altman

In venture capital, the leaders of firms often push for taking more risks, as the potential for high returns outweighs the risks of failure.