So much yes! Perhaps this shift in capital supply will fund fewer copy cat "X for Y" type businesses (Uber for Y), (Tinder for Y), etc. and focus on truly innovative ventures. I think true innovation in the energy and biotech spaces, to name a few, would still find capital. Like the saying goes, "nothing focuses the mind like half the budget."

"energy and biotech spaces" - it is hard to distinguish between actually innovative and looking like innovative (but smart scam with nice promises).

Why would higher interest rates lead to more innovative (and therefore risky) businesses being created?

Remember when all you had to do was say "blockchain?"

Now it's "AI", but VCs are getting wise to it.

I'm honestly struggling to see a downside. Less "innovation"?

Less chat apps that simply say “YO”

nooo, chat apps are good (developing an open source XMPP server)

Honestly, yes. I had a deep skepticism of a lot of VC-backed moonshots/SPACs in 2021. However, it’s hard to deny that these moonshots were at least aimed in the right direction — way more capital going to EVs, biotech, quantum computing, etc. You get some frauds in the mix (Nikola), but it’s socially utile to have a few of these projects gaining traction instead of highly profitable zombies.

ZIRP also seemed to be shifting investment tides toward green projects and away from oil. The new regime has allowed pollution to continue, and powered tyrannical governments like Saudi Arabia.

Fewer VC-funded hyper growth companies means a smaller pool of experienced developers to hire from for other ventures.

Not the end of the world here but worth accounting for some of the silver lining of zero interest rate policy.

You could make the argument that low interest rates are actually very harmful to competitive markets because unprofitable businesses like Amazon and Uber can operate at a loss for years.