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I think the reverse repo situation sheds some light on why this wasn't happening as much earlier: https://fred.stlouisfed.org/series/RRPONTSYD/ https://fred.stl
by JanisL 5y ago
I think the reverse repo situation sheds some light on why this wasn't happening as much earlier: https://fred.stlouisfed.org/series/RRPONTSYD/ https://fred.stlouisfed.org/series/RRPONTSYD/
Put simply there's now a glut of money that is waiting to be invested via loans in anything that has a good ROI with low enough risks. In the past due to higher interest rates and various other factors (including regulatory) this glut of money just didn't exist before.
- martinald 5y agoWell, go back a few decades and all businesses were pretty much debt financed. VC wasn't around - maybe a few friends and family rounds, but bank debt was the only option for growing a business (at least until you got to the public markets). This seems to have been lost over the past 20+ years. I wouldn't even think about going to a bank with a smallish business for financing, you'd instantly think of equity funding instead. Hopefully this changes because debt really is more sensible for many startups.
- JanisL 5y agoThe last time I went to a bank I remember thinking the loan terms were pretty bad for the business I was involved in relative to equity approaches. Why do you think there's been a shift towards equity financing? I wasn't looking at anything in this space a few decades ago, is it because debt financing options are worse or equity better?