Rising interest rates in the past couple years had a chilling effect on Silicon Valley, but Stripe co-founder John Collison says it was healthy.
John Collison, president and co-founder of Stripe, said the end of zero interest-rate policy flushed out the"wackiest" startup ideas, leaving worthwhile companies to get funded.
Rising interest rates crushed technology valuations and had a chilling effect on Silicon Valley. Stripe's co-founder says it was needed."Broadly speaking, the effects of higher rates have been quite good," John Collison, president of the online payments company, told CNBC in an interview at the company's annual conference on Wednesday."The period where money was free was not a healthy time in Silicon ValleyCollison founded Stripe with his brother Patrick in 2010.
"Valuations are a product of interest rates," Collison said. Still, he said"Stripe's business is the healthiest it's ever been." Regarding the drop in valuation, he added,"We're not losing sleep over it."While many tech companies took a hit in 2022 and 2023, Collison said the rising interest rate environment succeeded in flushing out the"wackiest" startup ideas, leaving the best ones to get funded.
Following an extended stretch of rock-bottom borrowing costs, the Federal Reserved started lifting rates in 2022, and hiked its benchmark rate last year to the highest since 2001. Rates have held steady since, and recent statements by Fed ChairFederal Reserve Bank Chair Jerome Powell speaks during a news conference at the bank's William McChesney Martin building on March 20, 2024 in Washington, DC.
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