HSBC Survey Reveals Investor Sentiment on AI and Fundraising Challenges

The latest HSBC Funding the Future Survey reveals a complex landscape for private market investors, highlighting a cautious optimism amid ongoing challenges in fundraising. Conducted between September 15 and October 12, 2026, the survey included 217 global investors with a combined assets under management (AUM) of USD 3.6 trillion, of which approximately USD 1.5 trillion is attributed to venture capital (VC) and private equity (PE). This edition marks a notable shift in investor sentiment, particularly regarding artificial intelligence (AI) and its implications for market dynamics.

Key findings indicate that while 48% of respondents expect an increase in VC and PE activity over the next quarter, a significant decline in long-term optimism is evident, with expectations dropping from 64% to 54% over the next year. This decline is primarily concentrated in the Asia Pacific region, suggesting regional disparities in investor confidence. The survey also noted that 51% of investors report recent financings as predominantly up rounds, the highest proportion recorded, while only 3% cite down rounds, indicating a potential stabilization in deal valuations following the market corrections of 2022 and 2023.

Despite this positive trend in deal quality, the survey underscores a stark decline in fundraising capabilities. Only 21% of private investors anticipate improved fundraising conditions, a sharp drop from 34% in July. This tightening is reflected in the reduced availability of "dry powder," with only 23% reporting an increase in capital reserves over the past year, the lowest level recorded. The prevailing macroeconomic environment, characterized by rising U.S. interest rates—expected to increase by 75% of private investors—poses significant challenges, with 87% identifying it as a major headwind.

AI continues to dominate investment focus, with 85% of private investors indicating it as the sector likely to attract the most capital in the coming quarter. However, concerns are mounting about a potential slowdown in AI infrastructure spending, with 56% of respondents anticipating a meaningful deceleration within the next six to twelve months. This sentiment is particularly pronounced in the data center and colocation sectors, where 55% of investors foresee significant impacts. The shift in expectations reflects a growing awareness of the limitations and challenges facing AI development, particularly regarding energy availability and chip supply.

Investor exit strategies are also evolving, with a record 85% planning to divest at least one portfolio company within the next year. While trade sales remain the preferred exit route, the appeal of IPOs has surged, rising to 35% from 17%. Notably, the preference for U.S. listings has decreased significantly, falling from 79% to 57%, while interest in Asian and EMEA listings has doubled, indicating a shift in geographical preferences for public offerings.

The implications of these findings are profound. The increasing focus on AI, coupled with investor willingness to adjust exposure based on emerging challenges, signals a market that is maturing and adapting to new realities. As investors recalibrate their strategies, the emphasis on infrastructure and energy availability will likely shape future investment decisions. The anticipated slowdown in AI spending could lead to a more cautious approach, with investors prioritizing sectors that align with sustainable growth.

Looking ahead, the evolving landscape suggests that companies in the AI sector must not only innovate but also demonstrate resilience in their business models to attract continued investment. The shift in listing preferences may encourage companies to consider diverse geographical markets for public offerings, potentially reshaping the competitive dynamics of the IPO landscape. As private investors navigate these complexities, their strategies will increasingly reflect a blend of optimism tempered by caution, underscoring the need for agility in a rapidly changing environment.