At Silicon Valley Bank, risky tech startups are lucrative business

Your downside risk remains the same (lose loaned money), but your upside gains increase substantially (interest vs interest+acquisition/ipo income). Thus the risk becomes more tolerable.

Surely the quote is talking about average risk. Yeah, adding amy investment to a portfolio will increase overall risk, but debt in startups is a lot riskier than equity since most fail and debt caps your upside.

The warrants are stock options - free to be given. SVB is not paying for them. It increases their potential upside beyond the interest rate. Across a portfolio it makes up for defaults.

I recall Greenspan keeping it, and always talking about increases, around 4-6%? He was always warning us of "irrational exuberance". People were investing like it would never go down. The biggest idiot at the party was making a killing in the stock market, and bragging about it. The professionals(stock, financial advisors) were basically telling everyone, "If you are not in the stock market; there's something wrong with you(you're an idiot?).

Well the bubble collapsed! I remember a Game Developer came into some money(his company was bought by EA.), I believe put his $500,000 into the stock market--one year before the crash. I believe he lost everything? I never asked, but I know that was a lot of money for this guy. He came from a family that was always struggling financially.

I am tired of the low interest rates on a personal level. On a completely selfish level, this recovery has not helped me in the slightest. I don't invest. Any profit I make on money is my hard work(hustling--buying and selling stuff), and I have always relied on the interest of CD's. The return on CD's has been close to 0 for years now. The only reason I keep money in the bank is because I don't want to bury it, and forget where I buried it! I know relying on the income from CD's is not savvy, but it's save, and that's literally how most poor people invest.

I got off base, but this free money I can't get for various reasons. Where I live homes/rent have skyrocketed. Too many people are paying their whole pay check for rent. It's not how much you make anymore; It's how much does it cost to put a roof over your head? People ask why do Developers make so much in the Bay Area? If not because they are Rock Star Programmers. It's because the employer knows how expensive it is to live here, and they don't want to live in Findlay, Ohio. (I happen to love the Midwest, and see the charm.)

I won't speculate if we're in a bubble, but this economy has not helped my particular economic situation. I do feel the rich have all the access to the very low interest rates, maybe they always did? My wish is the government didn't allow anyone entity buy more two realestate investments. Foreigners should be banned immediately from buying realestate if they are not citizens first. Maybe it would not work in the end, but I just don't like to see the extreme speculation in realestate we're seeing now. It's not so easy to move because your rent went up $750 a month. There's kids in school. There's a lot of factors. I guess when your young it's easy to pick up and move?

I don't know what to do, but I would like to see Janet Yellen raise interest rates, or do away with Dodd Frank Act? That's the reason why banks only lend to the people who don't really need the money? I know a lot of rich dudes, and they don't start business with the free money; they basically buy realestate and gamble in the stock market. The money is not trickling down.