A startup 'extinction event'

And more of the week's best financial insight

Closed sign hanging on glass door in small business window.
(Image credit: Virojt Changyencham | Gettyimages)

Here are three of the week's top pieces of financial insight, gathered from around the web:

How private equity ate the market

A startup 'extinction event'

More startups are "throwing in the towel," said Yuliya Chernova in The Wall Street Journal. The ramp-up in interest rates, making borrowing more expensive, is taking its toll on small businesses as "fresh capital from venture investors and bank loans" becomes harder to come by. "Startups in the U.S. raised $37 billion in the first quarter of this year, down 55%" from the same period a year ago. The longer the market stays depressed, "the closer many startups get to the moment of truth." Several high-profile tech startups have already folded or entered a wind-down process, including Zume, a "robotic pizza maker once valued at $2.25 billion." One partner at a major venture capital firm calls the wave of closings a "Mass Extinction Event for startups."

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More homebuyers turn to cash

The share of homebuyers paying all cash in April was the highest in a decade, said Al Yoon in Insider. "Cash buyers represented 33.4% of transactions in April," Redfin reported last week, "far above levels hovering around 25% for most of the past decade." Realtors are "battling the perception that the cash offer is always king" in order to keep borrowers from giving up. But in a shrinking housing market, where the "total number of homes on the market is 5% lower than last year," the competition is tight. "People who needed financing" were already "foiled by rising interest rates." Now any advantage for cash buyers may be amplified even more as banks tighten credit after the March bank runs.

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