Just over a year after HSBC Holdings acquired the UK unit of Silicon Valley Bank (SVB) for £1 (US$1.27), wealthy customers from Hong Kong and the rest of Asia are keenly exploring investment opportunities in tech start-ups, according to a senior HSBC executive.
HSBC, the biggest lender in Europe and Hong Kong, bought Silicon Valley Bank UK in March last year after its US parent collapsed following a run on the bank. Three months later, the newly acquired unit was rebranded HSBC Innovation Banking.
Although the acquisition was in the UK, it stirred interest among HSBC’s wealthy clients for potential investment opportunities with SVB’s start-up customers. Before its collapse, SVB was a go-to bank for Silicon Valley start-ups since the 1980s.
“After we acquired Silicon Valley Bank UK, many of our high-net-worth customers started to show an interest in the bank and its start-up clients,” said Maggie Ng, head of wealth and personal banking at HSBC Hong Kong.
The acquisition is promoting digital innovation at HSBC and also leveraging the bank’s global footprint, she said, adding that it has gained direct access to SVB’s platforms to connect with start-up clients.
Silicon Valley is home to some of the world’s largest technology companies, including Apple, Google and Meta. The tech hub has 63 unicorns – start-ups with a valuation of at least US$1 billion. It is one of the wealthiest regions in the world, with 84 billionaires reportedly living there. The presence of many innovative start-ups has also attracted large venture capital firms to set up there.
As part of efforts to connect wealthy customers with start-ups and other Silicon Valley executives and investors, HSBC last week arranged a three-day networking programme in California, bringing 25 of its Hong Kong and Asian private bank clients to the US tech hub.
A welcome dinner on May 14 put HSBC clients in touch with tech executives and start-ups, followed by a full day of meetings with venture capitalists, including Andreessen Horowitz, Lightspeed Ventures, Lux Capital and Cendana Capital.
On the final day, clients visited the offices of start-ups and venture capital firms such as Playground Global and Stanford Medical Centre before wrapping up the visit with an optional wine tasting tour in Napa Valley.
Following the SVB UK acquisition, HSBC CEO Noel Quinn said, “we now have given a very clear signal that we are a bank that wants to be heavily involved in the tech innovation sector”.
Fundraising by US start-ups in 2023 fell to the lowest level since 2019, according to PitchBook in January. Venture capitalists invested US$170.6 billion in the US in about 15,000 deals, 30 per cent lower than 2022, the research firm said.
Separately, a study released by HSBC Global Research on Wednesday showed that eight in 10 global investors held a positive view on venture capital and private equity investment in the next 12 months.
The survey, which was conducted in April, interviewed 204 professional investors who manage a combined US$2.3 trillion of assets.
HSBC Innovation Banking “offers a globally connected proposition for venture-backed businesses and their investors across the UK, US, Hong Kong and Israel”, said Frank Fang, head of commercial banking at HSBC Hong Kong and Macau, in a statement accompanying the results of the survey.
