Can you draw the link from central bankers operations to the inflow of cash to VC's? Because most CB operations are either setting rates (where I understand they at least have to stay in between some bandwidth the market will appreciate, or else face a situation like Switzerland), or transactions buying assets (mainly bonds).
Both do not directly accomplish the inflow of money into VC. VC's don't leverage (no banking license). I guess VC-firms don't borrow money at 1%, because no collateral?
The government leaves the cheap money door open to banks like Goldman Sachs. Goldman Sachs lends rich people a pile of money at 1%. Rich people invest that borrowed money with the intention to arbitrage the difference.
Works great, until the party ends when interest rates start increasing or the assets plunge and one has to cover their leverage, whichever happens first.
It is desire for yield. If you take the risk-less rate down from ~4% to 0%, then you can shift the rates for higher risk asset classes down similarly. If VC is historically a 12% return asset class (properly risked), LPs will demand the asset more, driving up supply and down the return until it is in-line with the risk profile (perhaps 8%?).
Both do not directly accomplish the inflow of money into VC. VC's don't leverage (no banking license). I guess VC-firms don't borrow money at 1%, because no collateral?