Taiwan’s on the startup map, but it needs tough love: Part 1
The island is brimming with growth and interest that didn’t exist a few years ago. With right ingredients in the mix, positive results will yield in timeBy Jonathan Woods 20 Aug, 2014
By all accounts, Taiwan’s startup ecosystem is growing. Last year, a milestone was achieved: an exit that could both galvanise the willing and would-be entrepreneurs and get a portion of Taiwan’s considerable money out of conservative hands and into the game by communicating. Yes, companies can emerge from the island and provide a return.
It could be the pebble that starts the compounding that sees Taiwan move from self-contained entrepreneurial environment to a unique hub attracting international attention, inspiring Taiwanese talent to return from overseas to inject energy and refined skill into the community. It could be the spark that sets Taiwan off in the direction of what intuitively seems would be its entrepreneurial comparative advantage: the intersection of innovative technological ideas with Taiwan’s traditional strengths in hardware manufacturing, research, and distribution which can be found in world-class homegrown companies such as HTC, Acer, and Asus, among others.
Admittedly, that’s a bit hyperbolic. But there has indeed been a notable exit. Taiwan’s Gogolook was acquired by South Korea’s largest internet service company NAVER Corporation for US$10 million in late 2013. Modest by global standards, but a notch in the belt nonetheless! There has also been high-profile international attention on the island. Appier, an advertising technology company based in Taipei, raised US$6 million from Sequoia Capital this June.
The energy on the island is increasing. Incubators abound. G20X is now in Taiwan, offering programmes with coaching from seasoned entrepreneurs and angel investors, teaching the foundational skills of building a business and raising money. SWELL, a corporate innovation platform based in Silicon Valley, focussing on education on disruptive organisations and providing a connection between entrepreneurs and large global brands now holds events in Taipei. This is in addition to the events and groups already existing: the IDEAS show, the APEC Accelerator Network Summit, e27’s Echelon, and so on. There is growth and interest that didn’t exist only a few years ago.
Volker Heistermann, the Managing Director of Taiwan-headquartered angel fund and accelerator Yushan Ventures and SWELL Asia-Pacific says, “In general, compared to when I started here four years ago, now there’s such vibrancy, and the depth of programmes that are brought here from Silicon Valley, that are homegrown, that come from other Asian countries, covering the job market, covering entrepreneurship education, is really impressive. I think there’s an ecosystem that has been created in a very short period of time and now people are zoning in on Taiwan’s strength: hardware.”
There’s understanding that entrepreneurship is a solution for Taiwan’s young generation that feels disillusioned, and that Taiwan presents a unique environmental advantage, since the biggest initial hurdle for a successful startup — proving the validity of your concept — is relatively cheap to execute from the island.
This is good news, not just for the individuals involved and on the periphery, but for the island that was scrambling for a new economic identity. It feels promising, and platforms are forming so that existing talent and opportunity do not fall through the cracks. Of course, one exit doesn’t make a Taipei Valley. A world-class technology company has not made headlines, yet. But the ingredients are in the mix. Faith and continued mixing will undoubtedly yield positive results in time.
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However, there’s still a way to go. In spite of these developments, some investors and Taiwanese who’ve created and operate their own technology companies are seeing persistent quality problems in the startup scene, with roots unique to the island’s culture and history. That feeling is encapsulated in a recent post by Mark Hsu, who founded the education consulting firm Envision and served as a judge in the preliminary round of the IIIs IDEAS show:
What Taiwan needs right now is a bit of tough love. We need more mentors who are actual investors, successful entrepreneurs, and in general people who have undergone the startup process to give real, honest feedback.
Normally, I keep my thoughts pretty private but as I was taking my son for an evening stroll tonight at Metro Mall, I saw Douglas Hsu picking up a box of sweets. It was 7:30 pm already and he was still in his full suit and tie. He was by himself without anyone next to him, let alone an entourage. Here’s a billionaire in his 70’s, still packing in a full day. You have to admire his work ethic.
My thoughts quickly turned to my young son. If my son was lost, I would want someone to guide him, if he needed encouragement, I would want someone to inspire him, and if he were out of line, I’d want someone to discipline him.
Similarly, change is only going to take place in Taiwan, if we treat the nation’s youth as our own children. Sometimes, we need to sit them down and set them straight to truly show them that we care.
So reflecting on the events of today, if we all want Taiwan to move towards a better place, then we need to all roll up our sleeves and work with our hands rather than just armchair quarterback all day.
- Mark Hsu, Founder of Envision
Last year it was discussed that Taiwan needed a group of Taiwanese individuals who have participated in world-class companies, from early-stage to exit — to return to the island and seed a new generation of innovative startups, bringing the tenacity of entrepreneurs who know what it’s like to work in the most energised entrepreneurial hubs around the world. That may be putting the cart before the horse. Some very successful entrepreneurs started and remain in Taiwan, entrepreneurs with experience growing a business in a harsher environment than today’s, like a cactus in the arid desert. Perhaps they can provide the guidance and tough love needed to push Taipei past the quality plateau, and bridge the gap between local energy and international recognition.
Tough love: Taiwan’s missing ingredients
The most conspicuous of the missing elements are talent in company building and talent in business development. Innovative startups and internet companies are a different beast from Taiwan’s previous generation of manufacturing companies, some of which successfully morphed into world-class, branded hardware firms. There are many intelligent and experienced business people in Taipei, no question, but as Peter Yen, Co-founder of the successful Taiwan-based e-commerce marketplace Pinkoi mentions, “Ninety per cent of people don’t understand entrepreneurship. They are good businesspeople but don’t have experience with the internet. Some of the business knowledge can be carried over” from industry but there’s a huge gap between creating an innovative technology company and executing business operations in an established firm. “In Taiwan, most entrepreneurs come from the hardware space. The challenge is bridging the gap between old entrepreneurship and now,” he added.
Heistermann agrees: “What is still lacking is the fundamental awareness and understanding of the core elements required to launch a venture-backed startup. People are open to learn but the right tools are still not available in Taiwan.” Taiwan needs the experience in business development, financing and company building that comes from those in the domain.