Today is Snoop Dogg’s birthday. In a sign of the times, Snoop was forced to give his personal blunt roller an inflation-driven raise earlier this year. Consumers in the UK are also likely to have their minds on their money and money on their minds as inflation on food reached 14.5% and overall inflation reached 10.1% in September.

The lowdown

• 😪 UK inflation reaches 10.1% as Truss loses another minister.

• 🏚 Amazon launches home insurance portal, pushing further into financial services.

• 📉 Wall Street ends multi-session rally as treasury yields rise.

Flex your finance muscle 💪🏦

In the second installment of our new section (included on Mondays and Thursdays), we look at another concept relevant to down rounds.

PIK Interest

Payment-in-kind, or “PIK” interest, is interest that is not paid out but instead accrues to the value of the original investment. A PIK debt instrument will have a higher rate of interest than a non-PIK equivalent, to compensate the creditor for the additional risk. The borrower benefits by not needing to outlay cash, which may be useful in extending runway in a growth phase.

Understanding PIK interest is becoming more important as startups eschew equity rounds and opt for debt instruments that allow them to preserve their valuation. Read more on this at the Financial Times: Venture debt: down rounds push start-ups to seek funds elsewhere ($).

A detailed example of a PIK instrument can also be found here.

Featured stories

Arm sues one of its biggest customers

British semiconductor company Arm is suing Qualcomm ($), one of its biggest customers, for using Arm’s IP without permission. The dispute centers on Qualcomm’s acquisition of startup Nuvia, which designed chips based on Arm’s technology.

The legal action comes in the run up to Arm’s hotly anticipated IPO. Softbank, which owns Arm, has been pushing for the company to IPO since US-based Nvidia abandoned its takeover attempt of the company earlier this year.

Where Arm will IPO has not yet been decided, but the choice is likely between the US and the UK. Liz Truss reportedly lobbied Softbank to keep Arm in the UK, in an effort to maintain the country’s listed technology sector.

Truss may have other things on her mind now as she battles a failing cabinet, illiquid pension funds, rising inflation and a head of lettuce.

The content we're consuming today

• The bad boy of the accounting world is at it again: EY’s US partners flouted conflict of interest rules, regulator says. (Financial Times)

Off-balance sheet items

• HBO’s Industry is a drama set in the world of investment banking. It’s no Succession but hey, what is.

The bottom line