- Video
- Global Research
- Data science
- General Research Insights
HSBC Funding the Future Survey: Measured optimism
- Venture capital investors are less bullish in our second survey but the majority are optimistic about activity in the next 12 months
- Both institutional and VC investors see the interest rate outlook as a potential tailwind, versus a headwind in April
- With IPO expectations on the rise and VC investors anticipating exits, we explore healthcare and tech sector trends
HSBC’s second Funding the Future Survey shows that investors have cut back expectations of increased venture capital (VC) activity in the coming three months. Yet optimism for a pick-up over a 12- month horizon remains.
Indeed, most investors now see the rate environment as a VC tailwind versus a headwind previously, as the majority of VC and listed investors now anticipate a rate cut in the US in the coming months. Expectations of initial public offerings (IPOs) are on the rise, with artificial intelligence (AI) investments being the most likely exits.
While venture capital is a significant sector in its own right, its wider influence on public markets is a key reason why we aim to give a window into the world of VC investors – their outlook, positioning, strategies, and plans. By also asking questions of investors who focus primarily on listed companies, we believe our survey offers a rich perspective on high-growth sectors.
The rate environment has pivoted from being seen as a headwind in April’s survey, to now being regarded as the biggest tailwind.
We believe the findings provide valuable insights as markets try to assess what’s next, especially as we can now see how views have shifted since our first survey in April. Among the key takeaways:
We found that 40% of VC investors expect market activity to pick up over the coming quarter, down from 52% in April.
Looking out over a 12-month horizon, 75% of respondents expect a pick-up in activity. The vast majority of investors (94%) expect fundraising conditions to improve or stay the same, reflecting the fact that lower interest rates tend to have a positive impact on fundraising trends.
Economic conditions and interest rates are seen as the biggest drivers to portfolios in the coming year. The financial sector is expected to see the strongest impact of interest rate changes.
The rate environment has pivoted from being seen as a headwind in April’s survey, to now being regarded as the biggest tailwind for the VC/IPO/PE sectors.
More VC investors expect higher IPO activity in the coming year (63% versus 52% in April). In terms of the most active IPO sector, 30% of respondents suggested it would be AI.
As many as 80% of VC investors plan to exit in the coming year, with buyouts and trade sales preferred exit avenues.
Our report also takes a deep dive into two important sectors for VC and PE activity – tech and healthcare – and compare the views of VC/PE investors with those of respondents who invest primarily in listed companies.
What tech investors say?
For VC/PE and listed investors AI remains their favoured subsector by some margin with cloud, data centres, and semiconductors also benefitting – most likely because they are enablers of AI. Tech VC investors are increasingly focussing on early-stage investments and extending their monetisation timelines.
What healthcare investors say?
The majority of VC and listed investors are bullish on the healthcare sector currently. Biopharma is one of the places within healthcare that has attracted the most investment. Within biopharma, oncology and metabolics are the standout areas with the majority of capital flows.
The fieldwork for this second edition of HSBC’s Funding the Future Survey was carried out between 3 July and 24 July 2024 by Survation among 200 market professionals representing USD1.93 trillion of assets under management, of which USD630bn is from PE/VC investors.
Would you like to find out more? Click here to read a full version* of the report. Please note, you must be a subscriber to HSBC Global Research to access this link.
If you have any questions, including on how to become a subscriber, please email AskResearch@hsbc.com
* Please note that by clicking on this link you are leaving the HSBC Global Banking & Markets Website, therefore please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.
Global Research
HSBC Global Research provides information, insights and thought-provoking ideas.
The following analyst(s), who is(are) primarily responsible for this document, certifies(y) that the opinion(s), views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Shiva Joon, CFA
This document has been issued by the Research Department of HSBC.
HSBC and its affiliates will from time to time sell to and buy from customers the securities/instruments, both equity and debt (including derivatives) of companies covered in HSBC Research on a principal or agency basis or act as a market maker or liquidity provider in the securities/instruments mentioned in this report.
Analysts, economists, and strategists are paid in part by reference to the profitability of HSBC which includes investment banking, sales & trading, and principal trading revenues.
Whether, or in what time frame, an update of this analysis will be published is not determined in advance.
For disclosures in respect of any company mentioned in this report, please see the most recently published report on that company available at www.hsbcnet.com/research.
Additional disclosures
- This report is dated as at 15 August 2024.
- All market data included in this report are dated as at close 26 July 2024, unless a different date and/or a specific time of day is indicated in the report.
- HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.
- You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument or of an investment fund.
This document has been issued by HSBC Bank plc, which has based this document on information obtained from sources it believes to be reliable but which it has not independently verified. Neither HSBC Bank plc nor any member of its group companies (“HSBC”) make any guarantee, representation or warranty nor accept any responsibility or liability as to the accuracy or completeness of this document and is not responsible for errors of transmission of factual or analytical data, nor is HSBC liable for damages arising out of any person’s reliance on this information. The information and opinions contained within the report are based upon publicly available information at the time of publication, represent the present judgment of HSBC and are subject to change without notice.
This document is not and should not be construed as an offer to sell or solicitation of an offer to purchase or subscribe for any investment or other investment products mentioned in it and/or to participate in any trading strategy. It does not constitute a prospectus or other offering document. Information in this document is general and should not be construed as personal advice, given it has been prepared without taking account of the objectives, financial situation or needs of any particular investor. Accordingly, investors should, before acting on it, consider the appropriateness of the information, having regard to their objectives, financial situation and needs. If necessary, seek professional investment and tax advice.
The decision and responsibility on whether or not to purchase, subscribe or sell (as applicable) must be taken by the investor. In no event will any member of the HSBC group be liable to the recipient for any direct or indirect or any other damages of any kind arising from or in connection with reliance on any information and materials herein.
Past performance is not necessarily a guide to future performance. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognised market it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors.
This document is for information purposes only and may not be redistributed or passed on, directly or indirectly, to any other person, in whole or in part, for any purpose. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. By accepting this report, you agree to be bound by the foregoing instructions. If this report is received by a customer of an affiliate of HSBC, its provision to the recipient is subject to the terms of business in place between the recipient and such affiliate. The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document.
Certain investment products mentioned in this document may not be eligible for sale in some states or countries, and they may not be suitable for all types of investors. Investors should consult with their HSBC representative regarding the suitability of the investment products mentioned in this document.
HSBC and/or its officers, directors and employees may have positions in any securities in companies mentioned in this document. HSBC may act as market maker or may have assumed an underwriting commitment in the securities of companies discussed in this document (or in related investments), may sell or buy securities and may also perform or seek to perform investment banking or underwriting services for or relating to those companies and may also be represented on the supervisory board or any other committee of those companies.
From time to time research analysts conduct site visits of covered issuers. HSBC policies prohibit research analysts from accepting payment or reimbursement for travel expenses from the issuer for such visits.
HSBC Bank plc is registered in England No 14259, is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of the London Stock Exchange. (070905)
© Copyright 2024, HSBC Bank plc, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of insert issuing entity name. MCI (P) 061/09/2023, MCI (P) 073/10/2023, MCI (P) 007/10/2023, MCI (P) 008/01/2024
Issuer of report
HSBC Bank plc
