HSBC brings startup-focused Innovation Banking to Singapore, allocates US$1.5 billion to finance high-growth companies
Lender will execute a go-to-market strategy that covers both entrepreneurs and venture capital firms
[SINGAPORE] HSBC on Wednesday (Oct 29) launched Innovation Banking in Singapore, targeting startups and venture capital (VC) firms in the Republic and across South-east Asia.
The lender will set aside US$1.5 billion to support this new banking segment. This includes the US$1 billion Asean Growth Fund and US$150 million venture debt offering launched in March 2024, as well as the US$200 million New Economy Fund launched in 2021.
Gilbert Ng, HSBC’s head of banking for Singapore, corporate and institutional banking, said: “Innovation banking completes for us the client spectrum in terms of the overall wholesale banking client segments we want to serve.”
Singapore is the 10th market HSBC has launched Innovation Banking in, joining Australia, continental Europe, Hong Kong, India, Israel, mainland China, New Zealand, the UK and the US.
“We are now able to connect ideas, capital and transactional requirements across these 10 markets, which are all innovation hubs themselves,” said Ng.
HSBC will execute a go-to-market strategy that covers both entrepreneurs and VCs; the lender will consolidate existing and new clients that fit this profile into this new segment, rather than have them scattered across different parts of HSBC.
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Startup customers that HSBC already serves include buy-now-pay-later platform Atome and foodtech startup Glife Technologies.
“This is about removing friction from banking so founders can focus on creating value for their VCs,” said David Sabow, global head of Innovation Banking.
Innovation Banking will also have a private banking solution for entrepreneurs, which was launched by HSBC’s private-banking arm on Oct 24. Ng said this aligns with how the lender is “thinking holistically about supporting entrepreneurs, both on their business side as well as on their personal side”.
With Innovation Banking, HSBC aims to graduate these customers as their companies grow through the corporate life cycle from early-stage startups to mid-market companies and beyond.
The bank has seen customers grow some 60 per cent since the formation of this business segment in 2023, after the acquisition of Silicon Valley Bank in the UK.
Innovation Banking will serve a majority of its clients’ needs in liquidity, with only about 20 to 30 per cent of clients borrowing from HSBC at any given time. Sabow said credit is not the only solution that clients will be interested in.
In terms of portfolio composition of startups, HSBC’s portfolio will mirror VCs’ in terms of deployment of capital. For instance, 75 per cent of global VC capital deployment goes into tech, with the remainder into life sciences, according to Sabow.
Neil Falconer, the newly appointed head of Innovation Banking in Singapore, said fintech will also play a bigger role in the Singapore portfolio, which is relatively diversified.
“Typically, it’s technology-linked businesses that are leveraging off the large consumer population that exists in this part of the world, not only in Singapore, but in the markets that surround us,” he said.
In terms of stage of growth, Sabow said most of HSBC’s customer acquisition occurs during the Series A funding stage, but it is also getting clients at earlier stages. This includes after graduating proven accelerators, founders with early product market fit and serial entrepreneurs.
To attract more founders as customers for Innovation Banking, it is offering a no-tariff banking suite of products. This will package together banking solutions that an early-stage founder might need.
“Then we, as opposed to saying that they have to pay for that for a period of time, actually give them some runway, saying here’s a free proposition to get your account started with us,” said Sabow.
The bank is looking to leverage the intangible strategic value it can provide to startup founders and VCs, which include relationships with potential customers and adding value via financing.
“In my experience, founders and their board members never forget when you add value early on,” said Sabow.
Falconer said bringing together the different parts of corporate and institutional banking services for this new business segment will help bring focus to grow Innovation Banking in Singapore.
“We will do more around the venture capital firms, I think by being part of the global innovation bank; that really opens us up to that network of the 850 or 900 firms that we bank, and that’s critical to making sure that we also bank the right portfolio companies and grow the business.”
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