‘Taiwan needs to find its own groove’: what startups want from the next president

Once Lai Ching-te is inaugurated 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 looming specter of China. Soon after he was elected in January, Lai said, “Global peace and stability depends on peace in the Taiwan Strait.” 

As long as that peace holds, Taiwan has room to focus on domestic issues, like industries that can make it more economically competitive. These include its startup ecosystem, which is still overshadowed by Taiwan’s massive semiconductor industry. 

The startup industry has grown over the past decade, but it still deals with issues like a lack of capital in later stages and regulations that make it difficult to get funding from foreign investors. 

But Taiwan’s entrepreneurs are hopeful that Lai will take actions that include loosening regulations around funding, fostering long-term support for sectors like deep-tech that take years to develop, and supporting new industries to create more jobs. 

Horace Luke, founder and CEO of battery swapping and electric scooter company Gogoro, one of Taiwan’s four unicorns, has had multiple discussions with Lai about the startup ecosystem and is optimistic.

“I’m very excited about seeing this new administration come in because he’s progressive,” Luke said. “Because of his background as a doctor, he sees the value of improving people’s lives. At the same time, he has the duty of being the new leader of the island and having initiatives that improve the financial livelihood of the island.”

Funding environment

One of the promises Lai made during his campaign was investing $150 billion NTD (about $4.7 billion USD) into Taiwan’s startups. That number is hollow without more detail, say observers. “It’s not about the amount, but how those amounts are distributed,” said SparkLabs Taipei co-founder and managing partner Edgar Chiu.

He added that Taiwan’s government should see South Korea and Japan as evidence of how much a startup ecosystem can grow with the right government support. In South Korea, there have been multiple infusions of funding, like $2.8 billion earmarked for 2024 and $6.1 billion managed by the state-owned Korea Venture Investment Corp. As of 2022, there were 22 South Korean unicorns, a massive jump from three in 2017.  

Some initiatives the Taiwanese government has put into place include the National Development Fund’s matching program and investments in more mature startups, early-stage investor Taiwania, and Startup Island, which takes Taiwan startups on trips to places like Japan and Silicon Valley to meet potential investors and customers. 

But for startups raising capital from private equity investors, especially international investors, the process is often challenging. As a result, many startups register a Cayman or offshore company. This is because the Department of Investment Review under the Ministry of Economic Affairs often takes a long time to review foreign investments and the process needs to be more transparent for startups, said Chiu.

“How can this procedure be more efficient, because right now it’s like a black box. You don’t know what’s behind it, you don’t know who to consult with,” he added. “A lot of startups that we invested in, the majority or about 70% are Taiwanese companies and they all face the challenge that when they raise the next round of investment, all those investors are coming from outside Taiwan.” 

Getting government funding approved can also be challenging. Su-Wei Chang, the founder and CEO of TMYTEK, which makes 5G mWave testing solutions, said one hurdle is convincing the committee about the importance of incremental goals, especially for complex technology.

“Normally we have to start writing all the paperwork, the proposals, and send it to them, but when the committee members review the project, they sometimes set some really unreasonable goals,” he said. “For example, they want 80% made in Taiwan. The phased array we built, we used beamforming ICs that are mainly from the U.S. or Europe.” 

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