[solaarphunk]

There is an equilibrium function that is basically unyielding.

On one side, target IRR and thus valuations are fixed for the investor by their LPs

On the other side, runway and thus survival rate are fixed by local market prices for founders who are risk tolerant and maximize for the same IRR as the investor.

The only solution is to physically move to a place that isn’t as stupidly priced as the Bay Area.

I think there is a reckoning coming, where investors will realize that backing startups in locations where costs continuously increase will become a suckers game. Survival rate naturally will go down due to shortened runway, while fundraising milestones will stay fixed - decreasing the expected IRR of the asset class.