Insane valuations despite questionable business models: There has always been a lot of glossing over in the start-up industry, criticizes investor Madeline Lawrence.
by Niklas Wirminghaus
Rounds of layoffs, shrunken valuations, bankruptcies: Is the start-up scene in crisis, Ms. Lawrence?
No. In individual cases this is unfortunate for those involved, especially for the employees affected. But what we are seeing is essentially a market correction of the unprecedented excesses of recent years.
Where did these exaggerations come from?
In times of zero interest rate policy, money was essentially free. It was incredibly easy to raise capital for venture capital funds because fund investors had few attractive alternatives due to low interest rates. Many new venture capital companies came onto the market and the funds were full to the brim. And the market for takeovers and IPOs was hot.
Source: Stern
