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How does 0% interest rate actually affect this though? Are that many companies actually funded on debt now? Or are are sales down because their customers were p

• zooq_ai 3y ago
  It's a knock on effect. Most software companies sell to other software companies and VC funded startups
• ketzo 3y ago
  Fair question, but there's a pretty direct line. ZIRP means that huge capital managers (sovereign wealth funds, pension funds, 401k managers, etc.) get very, very little money on the super-safe stuff they like to buy. They need to make returns somehow, so if a VC is promising them 15% returns, that sounds quite promising compared to T-Bonds that return 1.5%! But over the last two years, the yield on super-safe investments now looks more like 6, 7, 8, 9%. That makes a high-risk investment like VC much less attractive, by comparison. If VC is less attractive, less capital flows to their funds; smaller VC funds means much more discerning, stingy startup investment.
• Ekaros 3y ago
  You can get debt cheap to fund investment. Other side is that lot of money is always searching for some kind of return. With rates going up that money can go back to boring bonds, either from governments or even big reliable companies that are unlikely going anywhere. No need to gamble it anymore on tech companies.
• ojbyrne 3y ago
  Companies evaluate ROI for projects against the "risk-free" interest rate. When that interest rate rises, fewer projects are viable.