Updated: May 12, 2023, 12:23 AM IST
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Zero Interest Rate Policy (ZIRP) adopted by CE … MoreThe zero interest rate policy (ZIRP) adopted by central banks around the world, led by the US Federal Reserve, prompted investors to seek higher returns, resulting in gains in stock markets, real estate, crypto tokens, digital art and luxury goods. Global rallies took place in Venture capitalists were motivated to invest in startups with uncertain business models in hopes of selling the companies to new investors. However, with high inflation in the rich world forcing central banks to hike interest rates, money became more expensive, exposing the cash-burn business models of highly valued startups. But in 2022, the unlisted startup’s valuation didn’t respond immediately to central banks raising interest rates. A year later, valuations have begun to fall.