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Overshadowed by the semiconductor industry, startups want more government support
Once Lai Ching - te is inaugurate as Taiwan ’s president in May , his administration will mark an unprecedented three terms of Democratic Progressive Party rule . His victory underscored the desire of voters to maintain the status quo , even as Taiwan continues to deal with the loom specter of China . presently after he was elected in January , Laisaid , “ Global peace and stableness depends on peace in the Taiwan Strait . ”
As long as that peace of mind cargo hold , Taiwan has room to rivet on domestic issues , like diligence that can make it more economically private-enterprise . These include its startup ecosystem , which is still overshadowed byTaiwan ’s monumental semiconductor manufacture .
The startup industriousness has mature over the retiring decennary , but it still handle with issues like a lack of capital in later level and regularization that make it difficult to get backing from foreign investor .
But Taiwan ’s entrepreneurs are hopeful that Lai will take action that include loosening regulations around financial backing , nurture recollective - full term support for sector like deep tech that take geezerhood to evolve , and hold up new industries to create more chore .
Horace Luke , founder and chief executive officer of battery swapping and galvanizing ice yacht company Gogoro , one of Taiwan ’s four unicorn , has had multiple discourse with Lai about the inauguration ecosystem and is optimistic .
“ I ’m very delirious about consider this raw governing come in because he ’s progressive , ” Luke said . “ Because of his backcloth as a doctor , he examine the value of improving masses ’s aliveness . At the same time , he has the duty of being the new leader of the island and having initiatives that meliorate the financial livelihood of the island . ”
Funding environment
One of the promises Lai made during his campaignwas investing$150 billion NTD ( about $ 4.7 billion ) into Taiwan ’s startups . That number is vacuous without more item , say observers . “ It ’s not about the amount , but how those amounts are distributed , ” articulate SparkLabs Taipei co - founder and managing married person Edgar Chiu .
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He add together that Taiwan ’s government should see South Korea and Japan as evidence of how much a startup ecosystem can grow with the right government financial support . In South Korea , there have been multiple infusions of funding , like $ 2.8 billion allow for 2024 and$6.1 billion managed by the state - possess Korea Venture Investment Corp. As of 2022,there were 22 South Korean unicorns , a massive leap fromthree in 2017 .
Some enterprise the Chinese government has put into berth admit the National Development Fund ’s matching platform and investment in more mature startup , early - stage investor Taiwania , and Startup Island , which claim Taiwan startups on trips to place like Japan and Silicon Valley to adjoin potential investor and customer .
But for startups raising capital from individual equity investor , specially international investor , the process is often challenge . As a result , many inauguration cross-file a Cayman or seaward companionship . This is because the Department of Investment Review under the Ministry of Economic Affairs often take a retentive time to brush up foreign investment and the process needs to be more transparent for startups , said Chiu .
“ How can this procedure be more effective , because right now it ’s like a black box . You do n’t know what ’s behind it , you do n’t acknowledge who to consult with , ” he add up . “ A lot of startups that we invested in , the bulk or about 70 % are Taiwanese company and they all confront the challenge that when they raise the next round of investiture , all those investors are coming from outside Taiwan . ”
Getting government funding okay can also be challenging . Su - Wei Chang , the laminitis and CEO of TMY Technology , which cause 5 G mWave examination solutions , said one hurdle is convert the citizens committee about the grandness of incremental goals , especially for complex technology .
“ commonly we have to lead off writing all the paperwork , the proposals , and transport it to them , but when the committee members review the project , they sometimes set some really unreasonable goals , ” he say . “ For example , they want 80 % made in Taiwan . The phased array we built , we used beamforming ICs that are principally from the U.S. or Europe . ”
Another major challenge facing Taiwan ’s startups is lack of backing as they hit growing stages , especially Series B and above . A recent account by PwC and the Taiwan Institute of Economic Research find that 44.3 % of startup said they lacked approach to funds and capital , cook it the biggest challenge for first - time and returning laminitis . Most investments that do happen are in the earliest stages , with angel and come rounds making up 77.3 % of total funding received .
This is similar to Japan ’s funding environment , where many startup skin to conjure capital at Series B or Series C and often opt tolist on the Tokyo Stock Exchange Growth Sectioninstead .
A similar option for exiting is the Taiwan Innovation Board ( TIB ) of the Taiwan Stock Exchange , launched in 2021 and created to enable more startups from different sector to go public . It has a lower minimum mart cap and companies do n’t have to be profitable before they list . For biotech startups , revenue is n’t one of the criteria for inclusion on the panel . While it might be too hazardous for most retail investors , TIB gives startup more liquidity and another choice to go , which might actuate investor sake . One example of a Taiwanese inauguration that decided togo public on TIB isGogolook , an anti - fraud software provider that has expanded throughout East Asia and Southeast Asia .
C.C. Chang , the co - founder of instantaneous booking app FunNow , said that even though TIB is an choice , the politics still require to put into place platform to support startups between Series A and their potential exits .
“ We have a fortune of government programme for early - stagecoach startups , but deficiency programs for later stages , ” he said . “ If we do n’t have role fashion model for the ecosystem , then it will lack new talent , graduate student , and foreign talent to join new startups . ”
Going global
Another challenge startups face is that many government insurance policy design to help businesses go abroad are focused on the manufacturing and semiconductor industries — which is perhaps also unsurprising , givenhow primal these are to Taiwan ’s thriftiness .
Many of Taiwan ’s startups eye international expansion as soon as they plunge because it has a universe of just 24 million people .
Taiwan ’s sizing make it unlikely to produce a unicorn that only serves the domesticated market place , Chiu said . So to produce more unicorns , startups require more seed - stage support and then during their growth stage , they need to start call back global .
One of the reasons FunNow expand was because it want to take advantage of the first - removal company advantage in countries without alike apps , Chang said . It ’s presently centre on growing in Southeast Asia and is present in the Philippines , Thailand , Singapore , and Malaysia .
Southeast Asia is a quarry for many other startups and in 2016 , Tsai Ing - wen ’s disposal implemented the New Southbound Policy in a bid to make it easier for Taiwanese businesses to inflate into South Asia , Southeast Asia , Australia , and New Zealand .
But startups still face a luck of obstacles , suppose Chang . He adds the New Southbound Policy was a step in the right direction , but startups looking at new grocery store need more aid from the government . Obstacles they confront include dissimilar taxation rule and requirements for strange businesses in each new grocery store .
Chang want to see more tax motivator for technical school startup , note that there are substantial tax breaks in cosmos already for thebiotechandsemiconductor industries .
SparkLabs ’ Chiu is optimistic that Lai will enact policies to support the globalisation of Taiwan ’s tech industry . “ I think Lai Ching - te is going to take more belligerent action supporting startup that require global expansion since the Taiwan market is very small and I recollect it ’s necessary for us to do global expansion , ” he said .
Creating jobs and long-term growth
One of Lai ’s campaign promise was to make 20,000 startup job . During one encounter , Gogoro ’s Luke enjoin he talked to Lai about how to create thousands of business and “ one of the things we land on was not just electrification , but energy . How do you take big sectors like energy , mobility , EV , and find out what Taiwan is good at , get it good in Taiwan and then stabilize it in Taiwan so there is mass acceptance . ”
Luke uses Gogoro ’s provision chain , which it construct in Taiwan and employs thousands of people , as an example of how startup can make newfangled job . He added that other galvanic fomite makers can also do the same thing as they elevate their technology .
“ thousand of jobs can trigger an industry flywheel to hap , ” Luke aver . He noted that Lai was one of the first politician to support Taiwan ’s EV industry when he develop a moratorium on inner combustion vehicles while serving as chancellor . Lai continued working on it after becoming vice president in 2020 .
“ Sustainability tech was one of the things he really wanted to champion , ” Luke say . “ We had a half hour , 45 minute , good treatment around the topic . I mat that he ’s definitely more reform-minded . ”
SparkLabs ’ Chiu believes that quality over amount is significant when it get to caper innovation .
“ Twenty thousand occupation is a promising signal , but I think the job act is not primal . The character of the job is the major key , because more work will be done by AI or other sort of automation . I recollect it ’s promise , but how you interpret that into scheme is even more of import . ”
Chiu say that both South Korea and Japan have supported a focus in the country on long - full term growth for startups , specially those in areas that can take year to reach commercialisation .
“ For startups , especially other - stage and bass technical school startups , it takes sentence to tame these fresh initiation , ” he pronounce .
TMY Technology ’s Chang state that over the retiring five or six years , the Taiwanese government has focused on several sectors in a bid to make an reward over other markets and create something as large as its semiconductor industry .
or else of splitting up the money Lai pledged between multiple sectors , Chang think it ’s better to focalize on one or two . He points to the Japanese government’sfocus on its satellite communication system .
“ If you do n’t focus resource into one direction , then progress will be deadening , ” he tell .
Luke also believes that the Taiwan startup ecosystem ’s best bet is to work out on tech it already excels at and that has a strong competitive fosse so it can puzzle countries with larger economies of scale leaf . These include things that immix software and computer hardware , like Gogoro ’s SmartScooters . But that require long - term reenforcement .
“ Taiwan require to find its own vallecula and really ascertain the industries it can rely on for the next several X , not just a couple years , but long - terminus policies that allow an manufacture to blossom out , to create routes , create flywheels , and make investment that are long - term . ”
