Now the tide of money into the tech sector is ebbing, we can see who has no bathers on | Maurizio Fiaschetti

Following an increase in interest rates, new startups, old tech companies and SVB are facing hard times

Tech companies and their bank of choice are in crisis: there have been widespread layoffs, and Silicon Valley Bank (SVB) recently collapsed. So what went wrong?

Let’s start with tech companies. There are at least two types: “new tech” and “old tech”. The new-tech companies are usually small and dynamic, and their funding mix is predominantly made up of private capital (typically venture capital or angel investors). Conversely, old-tech companies have a more interesting mix of equity and debt to fund their activity – and therefore a more complex relationship with financial markets and institutions. This is partially down to the different levels of risk of the two asset classes, which also drives their different accessibility to retail investors.

Maurizio Fiaschetti is a lecturer in banking and finance

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from The Guardian https://ift.tt/DSq0gzF