HSBC’s Sonya Iovieno on undisclosed down rounds, startups trimming headcount and SVB’s collapse
Nov 23, 2023
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Head of venture and growth at HSBC Innovation Banking, Sonya Iovieno, discusses undisclosed down rounds, startups trimming headcount, and SVB's collapse. Topics include the impact of changing interest rates on startup valuations, the popularity of debt as a capital source, founder concerns and talent acquisition, VC finances and return models, and the financing of startups and SVB's acquisition by HSBC.
Venture capitalists predict a market opening in the second half of next year, with a focus on investing in Series B and Series C companies in hot areas like enterprise software, climate tech, AI, and life sciences.
Startups are increasingly turning to debt financing as an alternative source of capital, due to closed or soft equity markets, lower dilution, and lower cost of capital offered by debt.
Deep dives
Market Outlook for Next Year
Venture capitalists predict that the market will start to open up in the second half of next year, with a focus on investing in Series B and Series C companies in hot areas like enterprise software, climate tech, AI, and life sciences.
Impact on Pre-Seed and Seed Funding
Valuations in the pre-seed and seed stages have taken a hit in the past six months, resulting in fewer investments. However, there have been larger investment rounds in companies that show robustness and strong unit economics. The valuation downsizing has been necessary for the ecosystem to gain confidence and move forward.
Increasing Use of Debt Financing
Startups are increasingly turning to debt financing as an alternative source of capital. The closed or soft equity markets, coupled with the lower dilution and lower cost of capital offered by debt, make it an attractive option for startups to extend their cash runway and optimize their balance sheets.
Founders' Concerns and Strategies
Founders are focused on talent acquisition, customer retention, competitive market dynamics, and optimizing their spend and ROI. They are trimming non-core activities, reducing marketing spend, and investing in building robust tech stacks. They are also seeking external investors' feedback and exploring additional funding options to strengthen their negotiating position.
Sonya Iovieno knows European tech’s secrets. As head of venture and growth at HSBC Innovation Banking, where she works with thousands of VCs, startups and scaleups in the UK and Nordics, she has a view on who’s done an undisclosed down round, who’s been trimming headcount and who’s set up a “hunting line” for future acquisitions.
And she also knows what it’s like to go through a merger, after her organisation, formerly Silicon Valley Bank UK, was acquired by HSBC for a mere £1 after the dramatic collapse of its US parent company in March.
Iovieno joined us this week for a long-form interview on Startup Europe — The Sifted Podcast to share her predictions for 2024 and her experience of the tumultuous weeks of this spring.
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