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Here's a theory for you: the increased cost of capital doesn't cause people to stop seeking or loaning out capital, it just directs that capital toward shorter-
by pclmulqdq 4y ago
Here's a theory for you: the increased cost of capital doesn't cause people to stop seeking or loaning out capital, it just directs that capital toward shorter-term projects. A bridge or a skyscraper pays off a lot faster than a startup.
- red-iron-pine 4y agoHow long do you think it takes to build a skyscraper? Cuz it ain't short. Just he zoning, funding, and pre-project tasks can take years.
- pclmulqdq 4y agoWell, that's why basically nobody builds them in places like New York or SF. Even so, I think you're underestimating how long it takes to make it to a net profit as a startup. Even in one of these cities, the planning-to-profit timeline is under 5 years. Even 432 Park Avenue, the new huge luxury tower in NYC, took 3 years. A random startup takes a lot longer to get to the money.
- nerdponx 4y agoIsn't it more about returns on lending being really low, so investors are forced to put their money elsewhere, like tech stocks and VC funds?
- pclmulqdq 4y agoThat too, but the same effect applies to equity investors who want to buy equities for diversification.