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Expert: Don’t Worry About Higher Rates, Startups

 

Think your startup could suffer due to higher interest rates? Fear not, says Charles Moldow, general partner at Foundation Capital.

“It’s hard to argue we’re going to see much effect. It might be a lot to do about nothing in the short term,” Moldow told CNBC’s “Squawk Alley” recently.

The Federal Reserve raised interest rates for the first time in nearly a decade recently, marking the end of near-zero rates in the US.

Many startups have enjoyed unprecedented success, garnering valuations of more than $1 billion. However, many venture capitalists have already begun paring down valuations.

Still, Moldow said startups should be OK in the near future.

“Startups are focused on how they serve the customers, and are those products and services going to be in less demand as a result of higher interest rates. It’s hard to argue that a consumer is going to look at their credit card bill and see a rise in the interest expense and think, ‘Wow, I can’t really afford the next thing I wanted to buy,’ ” he said.

“If we saw 16 straight increases in rates over the next four years, I think you could see a dramatically different environment, but I think it’s much to do about nothing right now.”

 

Reprinted by permission.

Image credit: CC by Pictures of Money

About the author: CNBC

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