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Bulls on parade
The sixth edition of our proprietary Funding the Future Survey shows the investor confidence outlook for venture capital (VC) activity has picked up substantially since July. Concerns about tariffs have faded somewhat as the direction of US trade policy has become clearer, while expectations of Fed rate cuts have risen. Tech remains a favoured sector for both public and private investors, with AI-related tailwinds, including speed of technological change and changing consumer behaviour, driving positive sentiment
Carried out by Survation, this survey captures the views of 303 global investors representing a significant portion of the VC and high-growth investment community. Survey participants represented a total AUM of USD3.13trn, with 40% (cUSD1.25trn) attributed to VC and private equity (PE) investors.
The fieldwork took place from 15 September-9 October 2025. Compared with the second quarter of 2025, the period saw an easing in the pace of new tariff announcements and signs of a more dovish approach from the US Federal Reserve, albeit alongside continued geopolitical uncertainty and questions over the path of US growth and the labour market.
Against this backdrop, investor sentiment about the near-term outlook for VC/PE activity has improved markedly. Some 55% of private market investors foresee an increase in activity over the next quarter, up substantially from 30% in our previous survey in July 2025. Sentiment about the longer-term outlook has improved, too, with 74% expecting stronger activity over the next 12 months, up from 64% in July.
Geopolitics has overtaken tariffs and protectionism as the top risk to the outlook for VC/PE activity – perhaps reflecting a greater degree of certainty over US policy – with macro in third place.
Continued enthusiasm about artificial intelligence (AI) persists, with speed of technology change and changing consumer behaviour cited as the key tailwinds for VC/PE activity. Tech remains the standout sector in terms of VC/PE investor sentiment, with 66% having a bullish view. For investors in listed equities, TMT (Technology, Media and Telecoms) shows the most positive sentiment at 81% bullish, followed by PURE (Power, Utilities, Resources, and Energy) at 64%, and technology at 63%.
There is a strong contrast between private and listed investors when it comes to views on healthcare, however. While 58% of private investors have a bullish view on the sector, just 14% of listed investors feel the same. Only 9% of listed investors now say they are overweight healthcare, down from 58% in July. This realignment perhaps underpins the defensive nature of the sector: amid the initial tariff uncertainty, healthcare seemed a well-positioned defensive sector and investors were more positive on its outlook. It may also reflect uncertainty about US healthcare reimbursement and pricing policies.
We also asked respondents for their views on:
- Exits & IPO trends: Sentiment on the IPO outlook has improved. Some 61% of VC/PE investors expect an increase in IPO activity in the coming year vs 49% in our previous survey. Some 62% of listed investors now expect an increase in IPO activity over the coming year, up from 59%. A degree of greater tariff policy certainty and a more dovish Fed outlook are supportive factors. But while more private investors see IPOs as a desirable exit strategy (39%, vs 30% in July), trade sales remains the preferred option (53%). Some 78% of private investors plan to exit one of their portfolio companies in the coming year.
- Macro outlook: With macro cited by 70% of private investors as a headwind for the VC/PE outlook, we asked all survey participants further questions on US interest rates and the labour market. An overwhelming majority (83%) expect the Fed to cut rates in the coming quarter. Meanwhile, 52% of respondents expect the US labour market to weaken moderately in the coming quarter, and 17% expect it to weaken significantly in the near term. However, neither the rates nor employment outlooks seem likely to make investors shift their investment plans, according to the survey.
- Nine themes: Among the investment themes we track at HSBC Global Investment Research, Disruptive Technology remains the standout favourite for survey respondents.
- Regional trends: Among regional trends revealed by the survey, sentiment in private markets in Asia has also improved notably since our previous survey. However, just 53% of investors in the region are bullish on tech, noting geopolitical challenges as a key overhang. Investors are also bullish on Consumer Tech, Healthcare, and TMT in the region. IPO optimism has increased along with investors’ appetite for exits in the coming year. In Europe, investors have also become more bullish on private markets in the near term yet remain somewhat muted on the region’s IPO outlook. Investors are bullish on Tech and TMT sectors but worried about demand fluctuations as a downside risk in tech near term.
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