[bombcar]

The argument is that easy "free money" causes money to flow into equities, and that money goes in search of better returns which includes venture funding.

The moment the economy tightens up, suddenly the venture funds have less money.

I'm not sure what's causal in it all, but from the outside it certainly looks like that's what happens.

[selectodude]

>suddenly the venture funds have less money.

It's not that they have less money, it's just that when 1yr treasuries are paying over 4%, the returns in risk-adjusted investments need to either return a lot more or die.

[jhallenworld]

Probably both matter: suppose your grandma is your angel investor. If suddenly equities plummet, grandma sees less in her portfolio, so the funds available for angel investing are no longer there.

This is happening to me right now with my parents not being able to help as much with my kids' college tuition.