> What really needs explaining is why, despite the unusually strong general US job market[1] for several years now, the US tech market specifically has been seeing layoffs and hiring freezes
It's very simple (hyperbole):
When borrowing money costs nothing (interest), who cares if your business makes anything - money or not, just borrow more money at 0% interest to cover your expenses, or get investors to give you their spare money as they're more willing to when they can't get a ROI on 0% interest. All you need to do is convince investors that sales will come later. Startup heavy industries (such as tech) have an easy time getting funds, regardless of whether they have sales.
However, when borrowing money is expensive, businesses that don't have an established market don't do well, as startup funds such as loans are costly, and investors become more picky with their investments since they can get a risk free ROI. Startup heavy industries (such as tech) who don't yet have a positive net income, have a hard time getting funds, and therefore suffer.
This of course applies to all businesses not just startups, it's just more pronounced in startups as they tend to be more reliant on investment.
It's very simple (hyperbole):
When borrowing money costs nothing (interest), who cares if your business makes anything - money or not, just borrow more money at 0% interest to cover your expenses, or get investors to give you their spare money as they're more willing to when they can't get a ROI on 0% interest. All you need to do is convince investors that sales will come later. Startup heavy industries (such as tech) have an easy time getting funds, regardless of whether they have sales.
However, when borrowing money is expensive, businesses that don't have an established market don't do well, as startup funds such as loans are costly, and investors become more picky with their investments since they can get a risk free ROI. Startup heavy industries (such as tech) who don't yet have a positive net income, have a hard time getting funds, and therefore suffer.
This of course applies to all businesses not just startups, it's just more pronounced in startups as they tend to be more reliant on investment.