#48 Venture funding slows, Stocks rebound
US Fed increases interest rates
Welcome to another edition of Business News for Kids. Don’t miss the Mental Model on Asymmetric Warfare & Guerrilla Marketing. 🇺🇦
Busy business this week 💼
Global venture funding dropped by $10 billion in February 2022, indicating early signs of a slowdown or atleast pausing of hyper funding growth days. While 2021 saw funding rise almost 100% over 2020, first two months of 2022 were up ‘just’ ~30%. Checkout the chart and discuss observations. 👇
In order to control rising inflation, the Federal Reserve, America’s 🇺🇸 central bank, raised interest rates by 0.25% - the first time it has done so in 3 years. How does increasing interest rates help control inflation? Well, inflation 💸 is caused by higher spending (amongst other factors). When interest rates are lower you pay less on things like home loans and mortgages, which means you save more money. This ‘extra’ money typically gets spent by people.. causing more demand, and more demand leads to higher prices i.e. higher inflation. By increasing interest rates, it makes people pay more money towards costs like home loans/mortgages and leaves them with less cash. When cash is less people reduce spending and i.e. demand drops and so does inflation. Geek out here.
While the Russian Central Bank maintained interest rates at 20%. Russia faces a flash ⚡️ inflation situation + increased withdrawal of cash from the banking system💸. To avoid this, the bank had announced an emergency increase of interests rates from 9.5% to 20% back in February.
US stock markets saw some positives news in the Fed rate hike, and rallied up, 📈 taking it as an indication of the economy coming back to normalcy. While the top 500 stocks (S&P 500 index) popped over 3%, several stocks rallied over 15% in just 1 day, with stocks like Shopify jumping > 25% over 3 days.
And Chinese stocks rallied over 30% 🔝 in just one day after the Chinese government vowed to support startups and companies to raise funding by listing in China, Hong Kong and overseas.
Wait, what is..
Inflation: A general increase in price of goods and services, typically measured over a one year period for a particular Economy. A critical concept in economics. Geek out here and here.
Central Bank: The Central Bank or Reserve Bank of a country is the main (and only) financial institution that decides rules and regulations that govern the production 💰 and distribution 💸 of money.
Inspiring business people to know 🙏
Repeat alert. Meet the People of Ukraine, and don’t miss the Ukrainian origin founders 👇👇👇.
While Ukraine is still a developing nation, ranking 74th in the Human Development Index, it is fast becoming an Economic powerhouse. Right from Information Technology to Agriculture, Ukraine is a leading exporter and producer of world class talent and products. In 2019, it was the no.1 exporter of IT services in Europe and is consistently in the worlds top 10 producers for products like wheat, maize, oils and nuts. Moreover, several stellar startup founders like Salesforce’s Marc Benioff and Whatsapp’s Jan Kuom are of Ukrainian origin. Read more about Ukraine’s economy here.
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BNFK distills the latest, most interesting, Business News 📰 .. to an emoji filled, ultra informative, and fun Newsletter for Kids. Delivered every Sunday. Previous editions here. Forwarding this? Ask them to hit 👇 & subscribe for FREE.
Stocks, stonks and.. ⚡️
Warren Buffet’s Berkshire Hathway’s Class A stock closed over $500,000 for the first time ever. Thats 1 stock for $500,000 😅🚀. With Mr.Buffett promising never to split the stock. Stocks are usually split to make buying them easier for e.g. if 1 class A stock in above example was split 1000 times, the resulting price of each stock/share would be $500 - way more affordable than having to buy 1 stock for $500,000 🤑
Mental models.. whaaaat! 🤯
My dad insisted we put this section in here, even though I protested saying its going to be a while before kids need to apply mental models. Mental models are nothing but ways of thinking, you can use as a framework, to take decisions or solve problems. Who knows, they might just be useful!
Asymmetric Warfare - As the name suggests "asymmetric" means two sides that are not equal or similar or symmetric. Like Russia and Ukraine - Russia is an immensely more powerful army than Ukraine's.
So what is the concept of Asymmetric Warfare? When faced with such an asymmetric disadvantage (or advantage) be it at war or in business, one must adapt techniques to respond - just like how bravely the Ukrainian Army is using smart strategies to win the war on the streets. An example is Guerrilla Warfare - a method in which small bands of army personnel attack in small surprise bursts. The Technique is adapted and implemented as Guerrilla Marketing in business where smaller brands try and win over bigger brands by undertaking surprise or unexpected advertising campaigns.More models on Military & War from Farnam Street here. Read about Guerrilla Marketing here.
Tech, products, toys ++ 🤖
Ever so often cars get all the limelight when it comes to EVs, but sometimes comes along an electric bike that blows them cars past.. this week’s is one such. Meet e bicycle maker Super73’s first full electric motorbike with a top speed > 75mph/120kmph and a 100 mile / 160 km range 🏍👇
Pro Tip: The magic of learning is in curiosity. Don’t shy away from clicking those hyperlinked texts to read and learn more. We mostly hyperlink to text we have read ourselves to make sure it is safe, but please be aware that comments and ads shown on these pages are beyond our control. We recommend using a kids friendly browser to view the links. Please read all Disclaimers.
Take care. See you next week. Pray for Ukraine and for Russian citizens. 🙏