Taiwan is a dynamic economy gaining an increasing interest from businesses in the recent years. And why not? It is the 7th largest economy in Asia, ranks 15th in the world for global competitiveness, and is the leading global supplier of most computing-related hardware globally – large feats considering its size.
Add to that the government’s construction of a new technological hub they dubbed as Asian Silicon Valley, Taiwan is well on its way to becoming one of the most promising innovation and startup hubs in Asia.
The Asian Silicon Valley may also be the reason that current trends in the country is leaning more toward IoT. While Taiwan has been widely known for their hardware products, the past few years saw more focus on e-commerce and more recently into AI, robotics, and IoT, the last one specifically because of focussed support from the government.
But apart from these trends, what more can be said about the Taiwan startup ecosystem?
We got the chance to talk to Kevin Yu, Founder of Taiwan Accelerator, the country’s first seed accelerator. Kevin Yu has been a serial entrepreneur since the age of 23, has founded numerous companies, one of which is a VC firm, and has helped 600 companies in 14 countries with public listing and investor relations management.
A supported startup community
The Taiwan business landscape is an interesting one, such that according to Kevin, public companies and startups used to have very minimal interaction with each other. Now, however, the environment is much more encouraging as many of Taiwan’s public companies began setting up programmes of their own to build technologies and further innovation. Corporate accelerators are becoming popular, as public companies work on incubating more startups and providing them with funding.
The government also plays a huge role in furthering innovation in the country. Quite similar to what is seen in Singapore, Taiwan startups have access to government-supported innovation and entrepreneurship programmes, funding, and mentoring. However, the government is quite focussed on IoT and while it is one of the basic pillars of the tech industry in Taiwan, Kevin believes that industries like biotech, agricultural tech, and hardware, in which the country is traditionally good at, should not be forgotten.
Almost non-existent financial skills
It has been said many times before: what startups have in abundance in terms of developing their product, they lack in business management skills. That is exactly the entire point of incubators and accelerator programmes – developing not just the product but also the business management skills of the people behind the startup, to ensure a greater potential for sustainability after launch.
And while there are many aspects to business management that incubator/accelerator programmes addresses, Kevin specifically mentions finance, as he thinks that finance skills are something that is universally lacking from startups not just in Taiwan, but globally.
”The startups know what to do with their products and how to build their ideas. But in terms of finance, they are like a little baby…they need to have a solid financial model, know how to do a financial forecast, and most importantly, know how to deal with investors and communicate with them in their language.”
This is the reason that Taiwan Accelerator provides the startups in their programme with financial mentors – usually CFOs and Investor Relations Officers of public companies – to teach and guide them on financial matters. Kevin believes that providing startups with financial mentors gets them ready for both the immediate possibility of engaging with investors, and the more long-term advantage of making sound financial decisions for their business in the future.
A shift to a global mindset
But the challenge particular to Taiwan that Kevin sees is going global. Similar to Singapore, Taiwan is a small island with a very limited population. However, unlike Singapore startups who eye SEA or the whole of Asia as an initial market with the rest of the world on standby, most Taiwan startups do not have this mindset.
This is perhaps one of the most contradictory thing about the Taiwan startup ecosystem. Of all the countries in Asia, Taiwan has the largest possibility of being able to enter the China market – something that foreign companies has been attempting for years – and has played host to many of these foreign companies trying to do just that. But having a global mindset is still a problem according to Kevin.
”This is why we do the Demo Days outside of Taiwan. We incubate the startups to have a more international view and empower them to go global and then we take them out and push them to introduce themselves to a global audience.”
Even the government is actively encouraging Taiwan startups to begin going global, starting with SEA with an initiative that they call “Going South”. And while mindset is rather difficult to change, Kevin is glad to say that it is already beginning to shift. In the upcoming Demo Day in Singapore, for example, 15 Taiwan startups are participating and over half of them have already expressed plans of entering the SEA market.
More than just a gateway to China
Foreign companies who want to dive into the China market can head to Taiwan where they could conduct their R&D, as well as get advise from experienced entrepreneurs on how to do business in China. But Taiwan has more to offer companies – startups and large enterprises alike – than be a good stepping stone to the elusive China market.
“If they go to Taiwan, it is definitely not for fundraising. Foreign companies can consider going to Taiwan if they want to get more resources in terms of hardware, manufacturing, or manpower. There are great opportunities for them to get support here.”
Because of the country’s strength in “traditional” industries like hardware and manufacturing, it is to the advantage of foreign companies to head to Taiwan if they are in need of strong ODM (original design manufacturing), manufacturing, and hardware support.
Building up the roots
Kevin has been very vocal about leveraging on the country’s strengths. He stresses that while it is good that public companies and the government has taken a keen interest in supporting startups, and that while he thinks that AI, blockchain, robotics, and cyber security are the next big things that would greatly impact the ecosystem, he greatly believes that there are a lot of opportunities in what he calls the core strength of Taiwan – namely, biotech, agriculture tech, and hardware.
”This is why our portfolio is more diversified. While we do have startups in e-commerce and sharing economy, in our first and second cohort we had at least one agricultural startup, one biotech startup, and one hardware startup. We hope that every cohort would have at least one of these three.”
Because of these 3 core strengths of the country, Kevin believes that investors looking at Taiwan would find a mix of products and services that cannot be found anywhere else in SEA. It might be important to note that the 3 core strengths the country has all falls under the blanket term “Deep Tech”, which has been gaining increasing interest from investors recently. And if the country’s startups can leverage on these, then they are on the right track to becoming the next innovation hub in Asia.
Taiwan Accelerator (TA) is the first seed accelerator in the region, hosting two batches a year. TA is also the only accelerator in Asia to organise cross-border demo days in Taiwan, Singapore and the United States. Every selected startup receives seed funding followed by a 2-month bootcamp (TA Camp). TA focuses on seed round investments and does not serve as lead investor or take part in subsequent financing. TA invests in and nurtures any kind of seed-stage startup, with special attention currently being focused on eCommerce / platform, IOT, AI, fintech, agtech, biotech and greentech.
This October 19, Taiwan Accelerator will hold its inaugural Singapore Demo Day at Spacemob Ascent, where 15 startups from Taiwan Accelerator cohorts with pitch to 50+ investors. Investors can get their invitations here: https://tasgdemoday.eventbrite.sg
Disclosure: e27 is an official partner of Taiwan Accelerator Singapore Demo Day 2017
Featured image credit: elwynn / 123RF Stock Photo