Turning a corner?
We measure levels of VC activity using our proprietary HSBC Venture Investment Tracker (VenT). VC investments hit an all-time high in 2021, before falling substantially in 2022 and into 2023 as high policy rates increased the cost of capital. However, as 2023 progressed, there were signs that VC activity slightly improved, according to VenT. This suggests some optimism among VC investors, but we are not completely out of the woods yet, in our view. There are no signs we are about to see anything on the scale of the boom of a few years ago. But an improvement in VenT could nonetheless be positive news in 2024 for sectors that have caught VC investor attention.
Areas of focus
We have taken a closer look at volumes, valuations, verticals, and emerging spaces – the industries and subsectors that are just beginning to attract VC involvement:
- Generative artificial intelligence has attracted more than USD32bn in VC investments since 2022 and continues to garner unprecedented interest, as we discussed in our previous edition of Funding the future*. CloudTech, too, has seen an increase in funding.
- Biopharma is among the sectors seeing a big impact from AI, with major pharmaceutical companies and start-ups harnessing advanced computing power to pioneer new drugs. But it’s not just the appliance of technology that is drawing VC investors to biopharma, in our view. Emerging new treatments in everything from oncology to weight-loss drugs offer the potential for long-term growth, while novel therapeutics from gene therapy are also capturing investor attention.
- Sustainability, meanwhile, is a key theme for VC investors in Asia, with a number of recent deals in Semiconductors and CleanTech, including clean fuels, battery technology, and mini nuclear reactors.
More to come
Keep an eye for further instalments in our Funding the Future series later in 2024, discussing VC trends and their potential impact on the broader economy and markets worldwide.
Would you like to find out more? To listen to a special edition of our free Macro Brief podcast, click here*. To read the full note, click here*. Please note, you must be a subscriber to HSBC Global Research to access this report. In addition, associated notes from our Life Sciences & Healthcare team discuss the potential impact of VC trends on the Biopharma sector and publicly listed companies.
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