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Equity

Will rising interest rates decimate startup valuations?

Equity

TechCrunch

News, Business, Entrepreneurship, Business News, Technology

4.2372 Ratings

🗓️ 19 February 2022

⏱️ 29 minutes

🧾️ Download transcript

Summary

This is Saturday, which means it's not a usual day for us to drop an episode. But what are we if not try-hards at heart? So, we're back today. What do we have on store for you? I brought Anshu Sharma onto the podcast -- and a Twitter space, so make sure you are following the podcast, yeah? -- to chat interest rates, technology growth, startup valuations, and how they all tie together. Sharma was the right person to have on the show because he's been a big tech employee (Oracle, Salesforce), an investor (Storm Ventures, and as an angel), and he's a founder to boot. So he's been around not just the block, but several in the world of technology over time. TechCrunch has covered SkyFlow, his startup, a few times including its most recent fundraise. https://techcrunch.com/2022/02/16/welcome-to-the-post-pandemic-economy-startups/ Sharma finds some of the in-market worry about rising rates harming tech stocks silly. His thesis boils down to the value of growth on a longer time-horizon than what a DCF-tuned spreadsheet might tell you. That said, rising rates will impact some startup inputs, like venture funds in the medium-term, so there was a lot to chew on. We try to keep Equity pretty high-level, and focused on discrete events. But why have a show if you can't use it to scratch your own itches from time to time? The pod is back on Tuesday due to an American holiday this Monday. Chat soon! Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

Hello and welcome back to Equity, a Tech Ranch podcast all about the business of startups where we unpack the numbers and the nuance behind the headlines.

0:17.0

This is Alex, we are recording this on a Twitter space on Friday afternoon, and I have Dragooned onto the podcast my my friend and someone that I've known for a long time the

0:26.2

text scene on shoe Sharma on shoe hello how are you

0:29.0

hey Alex on shoe if you don't know him, former Salesforce VP, former Storm Ventures's venture partner,

0:35.8

which is actually where we first met, currently co-founder, sorry, just founder and CEO at Skyflow,

0:41.6

and I dug through his LinkedIn and apparently he even wrote code for Oracle in the 90s.

0:46.8

So Ansha you've been around for, what is it now, three or four tech cycles?

0:51.4

Yes, I have seen the times when... three or four text cycles? Yes.

0:52.8

I have seen the times when people said

0:55.7

Java is the future.

0:58.0

And we're here today because whenever I notice

1:00.7

that the stock market's going down and do a tweet saying,

1:04.0

look at this sell-off.

1:05.0

Anschru jumps into my Twitter mentions and goes,

1:07.2

yes, but if you look at a 10-year chart of sales forces revenue

1:10.1

growth, all that's meaningless noise.

1:12.4

So, honestly, what I want to do is set up. new growth, all that's meaningless noise.

1:12.5

So honestly, what I want to do is set up the conventional wisdom about what's going on, and

1:18.8

then I want to get your reaction to it.

1:20.7

But as far as I can tell, there is in general an expectation that as interest rates rise that there will be a decline in the value of certain high growth assets.

1:31.0

And in our little world of technology, it appears to be the

1:34.2

thesis that people mostly expect that as the Fed titans this year, monetary

...

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