Economists are warning that the Federal Reserve rarely stops at a single interest rate hike, pointing to historical precedent that suggests up to three rate increases could be coming as markets face a renewed stress test.
For venture capital, private equity, and retail backers alike, a sustained hiking cycle fundamentally reshapes the cost of capital. Higher risk-free rates raise the hurdle rate across every asset class, putting immediate downward pressure on growth valuations and forcing institutional LPs to rethink risk exposure.
For early-stage founders, this macro shift means capital efficiency and realistic pricing are paramount. When liquidity tightens and cost of debt climbs, backers aren't paying for speculative growth stories; they are pricing rounds around clear paths to sustainability and disciplined cash burn.