When the US Fed cut interest rates by half a percentage point last week, it was excellent news for enterprise capitalists backing one particularly beleaguered class of startups: fintechs, especially those that depend on loans to run their businesses.

These firms include corporate bank card providers reminiscent of Ramp or Coast, which offer cards to fleet owners. Card issuers earn cash from interchange rates, that are the transaction fees charged to merchants. “But they have to hand over the money when they get the loan,” said Sheel Mohnot, co-founder and general partner at Better Tomorrow Ventures, a fintech company.

“The terms of this loan have just improved.”

case study is Affirm, a buy now, pay later (BNPL) company founded by famous PayPal mafia member Max Levchin. While Affirm is not any longer a startup — it went public in 2021 — as interest costs have risen, the company’s share price has fallen from around $162 in October to below $50 per share as of February 2022.

BNPLs pay merchants the full amount upfront; they then allow the customer to pay for the item in several installments, often without interest. Many BNPLs generate revenue primarily by charging sellers a fee for every transaction processed on their platform, relatively than interest on the purchase. Their business model didn’t allow them to pass on the drastically higher costs they incurred.

“BNPL banks were making rapid profits when interest rates were zero,” Mohnot said.

Affirm competes with many BNPL startups. For example, Klarna is a player that has been expected to go public for years but it surely still is not ready in 2024, its CEO told CNBC last month. Some BNPL startups didn’t survive in any respect, reminiscent of ZestMoney, which shut down in December. Meanwhile, other lending fintechs have also gone out of business on account of high interest rates, reminiscent of the business-building bank card Fundid.

While it could seem counterintuitive, lower rates are also good for fintechs offering loans. Auto loan refinancer Caribou, for instance, falls into this segment, predicts Chuckie Reddy, partner and head of growth investing at QED Investors. Caribou offers loans with terms starting from one to 2 years.

“Their whole business is based on being able to move you from a higher rate to a lower rate,” he said. Now that Caribou’s financing costs are lower, they need to have the opportunity to scale back the fees they charge borrowers.

GoodLeap, a provider of solar panel loans, and Kiavi, a lender specializing in fix-and-flip loans for home investors, are other short-term lenders that will profit. Like Caribou, they may potentially pass on a few of their interest savings to customers, resulting in a surge in lending volume, said Rudy Yang, fintech analyst at PitchBook.

No sector needs to be helped by lower interest rates as much as the fintech startups that are taking the mortgage industry by storm. However, it might take a while for this recently devastated space to recuperate. While the Fed’s cut was large, interest rates are still high in comparison with the long ZIRP (zero interest rate policy) era that preceded it, when Fed rates were near zero. The latest Fed interest rates are currently in the range of 4.5% to five%. So the loans available to consumers will still be several percentage points above the Fed’s base rate.

If the Fed continues to lower interest rates, as many investors hope it’ll, many individuals who bought homes during the period of high interest rates will likely be on the lookout for higher deals.

“The refinancing wave will be huge, but not tomorrow or in the next few months,” said Kamran Ansari, enterprise partner at VC firm Headline. “It may not be worth refinancing at half a percent, but if rates drop by a percent or a percent and a half, we will start to see a flood of refinances from everyone who has been forced to take the plunge on a mortgage at higher rates over the last few years.”

Ansari predicts a significant rebound for mortgage fintechs like Rocket Mortage and Better.comafter poor results in recent years.

Next, VC investor dollars will almost actually flow. Ansari also predicted a surge in latest mortgage tech startups if interest rates turn into more attractive.

“Any time you see a space that has been dormant for four or five years, there are probably opportunities to reinvent and update the algorithms, and now you can get into AI-centric underwriting,” he said.

In August, a Russian warlord posted a video on Telegram showing a pair of Cybertrucks patrolling a road in Chechnya, apparently armed with heavy machine guns. Aside from the (yet) unanswered questions on how to get the vehicles, Wired thought it was price trying out whether the Cybertruck actually is sensible as a “technical” term for modified civilian vehicles utilized by armed forces and military groups.

What did the outlet find? Well, it’s complicated. One expert noted that Cybertrucks’ stainless-steel construction can take some abuse and that they’re fast and quiet, which is a bonus for stealth operations. The second expert described trucks’ heavy reliance on software as potentially disastrous; also they are incredibly heavy, making maneuverability and traction difficult in some terrains. (For the record, they do not seem to be doing thoroughly within the sand.)

The former expert told Wired: “It’s great that (the Cybertruck) is crash-safe and might take a bullet. But if you happen to break the wishbone and might’t get that part, it’s going to be pretty useless.

ChatGPT may change into dearer in the coming years.

The New York Times, citing internal OpenAI documents, reports that OpenAI plans to increase the price of individual ChatGPT subscriptions from $20 per thirty days to $22 per thirty days by the end of the 12 months. More rapid growth will occur over the next five years; by 2029. OpenAI expects to charge $44 per thirty days for ChatGPT Plus.

The aggressive moves reflect investor pressure on OpenAI to cut losses. Although the company’s monthly revenue reached $300 million in August, OpenAI expects to lose about $5 billion this 12 months, according to the New York Times. Expenses corresponding to staff, office rent and AI training infrastructure are to blame. ChatGPT itself was around at one point apparently costs OpenAI $700,000 per day.

OpenAI could face retaliation if it raises prices too quickly. Although ChatGPT currently has roughly 10 million paying users, surveys suggest that many individuals think the current price of $20 per thirty days is just too high.