The Great Unbundling: How Rising Interest Rates are Reshaping the Tech Industry

In the not-so-distant past, tech companies were the epitome of innovation and growth. With low interest rates and a willingness to take risks, they invested heavily in ideas that might not have yielded immediate returns. This approach led to impressive returns on equity (ROE) of around 20% in the late 2010s, a significant premium over the risk-free rate of 1% at the time. I.e. a 19% return above the risk free rate.

However, the post-pandemic landscape has changed dramatically. Rising costs and…