The growing complexity of startup financing in the age of AI

This article summarizes an episode of On Call with Insignia’s video series featuring Jonathan Yip, head of innovation banking for Asia at HSBC.

Photo credit: Shutterstock

Jonathan Yip, head of innovation banking for Asia at HSBC, says that world events are forcing tech creators to work together. This shift conflicts with new rules for how companies move cash, borrow money, and build AI infrastructure.

AI tools change how companies manage money

Building AI spans a complex supply chain of software, models, chips, data centers, and power sources, and each layer demands a different type of capital to fund it.

“The demand on credit is certainly broadening,” Yip says. “What’s different in this cycle of innovation versus the last cycle of innovation is how these business models come together.”

Because product development cycles vary wildly across these layers, loans and private credit have become necessary strategic tools rather than mere backup choices.

“Some of it requires more patient capital, some venture debt, some private credit,” he argues. “So it’s gotten a lot more complex, and it’s really important to find the right partners with the right risk appetite.”

High investment numbers hide market changes

While the overall investment ecosystem remains healthy, capital is consolidating heavily toward specific tools.

VC deployment has scaled rapidly over the last couple of years. In 2024, roughly US$300 billion to US$350 billion of capital was deployed into the asset class. Through 2025, that figure rose to US$425 billion, and 2026 is projected to break previous records.

For business leaders, these huge aggregate figures mask a distinct lack of capital for ideas outside the immediate spotlight, which often leads to hidden job losses and budget cuts.

“A lot of that is being concentrated into AI and very specific sectors,” Yip shares. “Funding wise, the market is functioning. It’s becoming more selective around where it goes, which markets, and which opportunities.”

This environment forces CFOs to secure funding earlier and rely more on banking facilities for liquidity and credit, as traditional equity rounds take longer to close.

Removing banking delays speeds up business

When market conditions tighten, controlling operational spend becomes paramount. Financial institutions that eliminate bureaucratic friction help directly extend a startup’s runway.

Choosing the right banking partner directly dictates how fast an organization can move. If opening cross-border accounts takes too long, hiring stalls, vendor bills go unpaid, and critical market entry falls behind schedule.

Expanding to new countries breaks standard money management

AI helps startups grow faster

Financial leaders start managing sales teams

Building a company that survives difficult markets