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HSBC Funding the Future Survey - Sentiment, AI and Private Credit

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Our eighth Funding the Future Survey shows investors in private markets are more upbeat about dealmaking in Q2 2026 than public equity investors, who have turned more cautious on the market outlook. Venture capital (VC) activity has ticked up since December, anticipating higher dealmaking activity. Meanwhile, public investors see AI, rapid tech change and shifting consumer habits as tailwinds versus geopolitical and economic risks as headwinds.

Carried out by Survation, this survey captures the views of 211 global investors representing a significant portion of the private and public high-growth investment community. Survey participants represented a total AUM of USD2.85trn with about USD715bn attributed to VC and private equity (PE) investors.

The fieldwork took place from 16 March to 10 April 2026. The first quarter of 2026 was highly volatile for markets. Several narratives unsettled investors at the same time: concerns that AI could be too disruptive, questions about resilience in private credit, and a steady flow of geopolitical developments, including headlines linked to Venezuela, Greenland and the Middle East conflict in March.

In private markets, persistent liquidity constraints, and geopolitical uncertainty continued to weigh on decision-making. While headline indicators suggested venture capital fundraising and deal activity improved, capital flowed unevenly, concentrating in AI, software and smaller “periphery” deals. Exits, however, remained muted and heavily reliant on M&A rather than IPOs, with only a small number of notable listings and trade sales generating meaningful momentum. As a result, distributions back to limited partners remained limited.

Against this backdrop, private market investor sentiment about the near-term outlook for VC/PE activity remains positive. In the survey, 54% expect an increase in activity over the next quarter, up from 42% in our previous edition (December 2025). Longer-term expectations also edged higher, with 57% expecting stronger activity over the next 12 months, up from 55% in December. Geopolitics, protectionism and changes in interest rate environment are seen as among the key headwinds to activity, while the pace of technological change remains the key tailwind.

Public market investors, by contrast, have adopted a more neutral stance. Some 43% of listed equity investors are positive on the outlook for the coming quarter, down from 71% at the start of the year. At the same time, 40% now expect a decrease in activity, marking a sharp shift in sentiment from the start of the year.

Although investors expect higher VC/PE activity, near-term net sentiment has softened and become more differentiated by sector. Private market investors now show the strongest bullishness towards Industrials, PURE (Power, Utilities, Resources and Energy) and TMT (Technology, Media and Telecoms). Meanwhile, sentiment on Healthcare and Financials has cooled. This hints at greater dispersion among managers.

Public equity investors rank Technology more highly along with Industrials and TMT. They remain mostly neutral on Consumer Technology sectors, while Financials and Healthcare sectors have a somewhat bearish skew. Some 78% of public tech investors said they anticipate a further increase in tech earnings in the coming quarter.

1. Private credit investors remain moderately positive

With all the noise around private credit, it is difficult to distinguish between isolated problems with a limited number of firms vs a systemic problem in the asset class. The question remains: what is investors’ appetite for private credit moving forward? According to our survey, investors in both public and private markets remain moderately positive on the asset class.

2. AI: what next for 2026

Our survey shows AI remains one of the most important structural growth themes for 2026, but investor enthusiasm is becoming more discriminating. Upside still exists if efficiency gains continue, enterprise returns on investment broaden and infrastructure constraints ease, yet the survey shows investors are increasingly focussed on whether AI can convert adoption into monetization. Alongside monetization disappointment, geopolitics and energy constraints are now seen as key downside risks.

The full note contains further insights into respondents’ views on

  • Exits and IPO Trends
  • Headwinds for private markets
  • HSBC Global Investment Research’s Nine themes sentiment
  • Regional trends amongst Asian, European, and US investors

Clients of HSBC Global Investment Research can read the full findings of our survey by reading the full report* on our website. To find out more about HSBC Global Investment Research, including how to subscribe, please email us at AskResearch@HSBC.com

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