Venture-backed start-ups expanding across Southeast Asia may need regional banking infrastructure before they produce predictable earnings. Singapore can provide a base for incorporation, fundraising and management, but companies seeking regional scale may need to establish operations in Indonesia, Malaysia and other markets. Singapore Economic Development Board says the country recorded Asia-Pacific’s highest number of completed regional headquarters between 2013 and 2023. This expansion creates an immediate need for accounts, payments, foreign exchange and cash visibility, followed in some cases by financing before the company meets conventional corporate lending criteria. A start-up’s accounts, payments and cash management allow a bank to establish an operating relationship without taking lending risk. HSBC says it uses that relationship as a starting point for assessing which venture-backed companies can support selective credit before achieving consistent profits. The bank formally expanded its Innovation Banking business into Singapore in October 2025 and said it would allocate $1.5 billion to lending for start-ups in the city-state. Neil Falconer, Head of Innovation Banking, Singapore, at HSBC, said the bank had already spent four to five years serving venture capital firms and start-ups in the market before formalising the specialist proposition. That period covered a marked deterioration in the funding environment. Singapore's venture funding fell from $7.0 billion in 2024 to $4.6 billion in 2025, though median deal size rose as capital concentrated into later-stage rounds, according to Enterprise Singapore's Venture Funding Landscape report — a pattern consistent with the wider Southeast Asian slowdown, where Google, Temasek and Bain found private funding for the region's digital economy remained about 70% below its 2021 peak in the 12 months to June 2025. Higher interest rates, lower start-up valuations and a prolonged weakness in IPO and acquisition activity may have reduced investors’ appetite for risk and limited the capital returned to venture funds. HSBC said its engagement across this funding cycle gave the team greater visibility into how founders responded by extending their cash runways and placing greater emphasis on profitability and cash discipline. Profitability changes the financing discussion "You've seen people thinking more about profitability earlier. That's been a real change," Falconer said. Greater emphasis on profitability may affect cash-flow forecasts, dependence on future equity rounds and the period a company can continue operating before it needs more capital. These factors determine whether a lender can identify a credible source of repayment. Falconer has observed Singapore-based founders entering several Southeast Asian markets earlier in their development. "You have real international businesses early on," he said. Regional expansion brings additional costs, currencies and regulatory requirements while many companies remain loss-making. Founders may need to fund local teams, establish legal entities and manage liquidity across markets before the new operations generate sufficient revenue. Their treasury requirements develop alongside their commercial operations, and financing discussions often begin earlier because expansion increases working capital needs before the business produces predictable cash flow. Regional operations make cash visibility an early requirement Account opening, payments and cash visibility typically precede discussions about credit. Companies entering a new market must meet local documentation, regulatory and banking requirements while coordinating funds across separate accounts and currencies. "For a small company, there is a lot of friction in setting up banking on day one," Falconer said, adding that founders often encounter difficulties when banks in a new market do not know them. The challenge extends beyond gaining access to an account. "How do you think like a big company when you are small and put the right infrastructure in place?" Falconer asked, describing discussions HSBC has with investors and portfolio companies. Treasury controls, governance and working capital management increasingly influence expansion and financing decisions rather than remaining administrative matters that companies address later. HSBC provides transaction banking services across six Southeast Asian markets. Falconer said founders can view liquidity "at the click of a button" across markets and decide where they can deploy or move funds. The resulting transaction history may give the bank information about the company’s balances, collections, payments and regional operating pattern before it considers a request for credit. Regional banks are also developing earlier relationships with growing companies through different models. DBS StartUp Movement combines transaction banking services, digital tools and access to business financing, targeting a broad base of start-ups and small and medium-sized enterprises. UOB FinLab, which says it has supported more than 33,000 businesses since 2015, connects companies with technology providers, industry partners and business-development programmes, with a mandate centred on capability building and ecosystem access. The three approaches mark different points of entry into the same shift, as banks move earlier into a growing company’s lifecycle before it becomes a conventional corporate borrower. Institutional backing narrows the lending population An operating relationship gives HSBC information about a company, but transaction activity alone does not make a loss-making business creditworthy. The bank says it focuses on companies that have already attracted institutional capital, meaning funding from professional venture capital investors rather than only founder money, friends-and-family capital or self-generated revenue. "What differentiates Innovation Banking from a typical small and medium-sized enterprise (SME) banking franchise is that we follow institutional capital," Falconer said. "We are banking companies that have already raised some form of institutional capital that we know and have a relationship with." The investor relationship may provide information about the company’s governance, management and access to capital, but it does not guarantee repayment. HSBC treats institutional backing and the investor relationship as inputs into its assessment rather than an automatic qualification for debt. "We deploy capital selectively," Falconer said. "We're not financing every startup in the market, but we are selective. We're doing it at a reasonable scale." Repayment capacity determines the financing structure Venture backing may help HSBC identify companies supported by professional investors, but the bank must still determine how each borrower will repay. "Case by case, you have to understand where the value is in this business and how you get comfort that, as a bank, you will be repaid," Falconer said. The assessment considers the founder, business model, sector and the sources from which the bank expects to be repaid. Falconer said Southeast Asia’s venture debt market remains smaller than those in the United States and United Kingdom (UK). Southeast Asia's venture debt market grew at a 75% compound annual growth rate to $2.12 billion in 2024, a fraction of Europe's $19.78 billion market, according to the Global Venture Debt Report 2025 by Stride Ventures and Kearney. Lending that depends heavily on a future equity raise remains less established in Southeast Asia, so HSBC does not apply one structure across its Innovation Banking portfolio. The bank considers receivables, contracted payments, balance-sheet strength or tangible assets when a company has not achieved positive cash flow. "Across the bank, we have teams with experience covering everything from mergers and acquisitions (M&A), trade finance, securitisation to traditional working capital and venture debt," Falconer said, describing the process as finding the appropriate structure rather than fitting "a square peg into a circle." The financing must match the company’s use of funds, operating model and ability to meet its obligations. Debt can preserve equity but adds repayment and refinancing pressure when revenue or subsequent fundraising falls below expectations. "You have to accept that the venture-backed landscape is higher risk," Falconer said. HSBC considers whether a company’s need for additional liquidity is matched by its capacity to service debt without adding undue pressure to its operations. Financing deepens the corporate banking relationship According to HSBC, Innovation Banking serves close to 1,000 venture-backed companies across Asia, ranging from early-stage businesses to companies preparing for public markets. The bank may begin with accounts, payments and treasury services before providing suitable clients with more tailored financing and moving larger companies into corporate or institutional coverage. As a company grows, its banking requirements may expand to include a broader range of financing, foreign exchange, transaction banking and advisory services. An early operating relationship may help HSBC retain these mandates as the company gains access to more financial institutions and funding sources. "If I do my job right, in ten years' time, some of our largest clients will have been Innovation Banking clients at one point in time and then graduated to be our large corporates of the future," Falconer said. Faster growth shortens the assessment period Institutional funding can allow venture-backed start-ups to hire, develop products and establish operations in several markets before they generate predictable earnings. Their need for accounts, payments, foreign exchange and cash management can therefore arise early in their development, followed in some cases by requests for financing to support expansion or working capital. Falconer described HSBC’s approach to resourcing early-stage clients: "We are being very deliberate about resourcing startups and servicing startups as corporate banking clients on day one," he said. Falconer said HSBC was encountering some companies as potential borrowers earlier in their development than it had three or four years ago. In sectors such as artificial intelligence, substantial seed rounds can allow a small number of start-ups to hire, develop products and expand before building a long operating history. "Our approach to financing does not really change the underlying principles, but it is happening earlier than it might have happened three or four years ago," Falconer said. This acceleration may shorten the period in which a bank observes a company before deciding whether to extend credit. Selectivity, rather than the size of an equity round or an investor's reputation, appears to remain HSBC's underwriting anchor as it moves earlier into a company's lifecycle. Case-by-case assessment of repayment capacity takes precedence over deal size or investor pedigree, regardless of how early a company approaches the bank. Whether Innovation Banking can convert early relationships into future corporate and institutional clients will shape how closely it integrates with HSBC's broader banking pipeline. That question echoes a broader challenge for Southeast Asian banks, that is supporting companies that scale and raise institutional capital across borders before turning a profit.
