Research

Photo: Taiwan Institute of Economic Research

Fundraising has always been the most challenging part of Taiwan's startup teams in the process of starting up a new business. The Small and Medium Enterprise Administration(SMEA), Ministry of Economic Affairs, aims to help small and medium enterprises and startups bridge the gap in the initial stage of entrepreneurship and increase their visibility. It has held the Global Angel & Venture Investment Summit for four consecutive years and invited 30 domestic and foreign venture capitalists and angel investors to visit Taiwan. Thirty teams were selected from 130 startups to participate in interactive matching. Experts from Singapore and Hong Kong were invited to give keynote speeches on entrepreneurship.

Ho Chin-Tsang, Director-General of the SMEA, MEA pointed out that nearby Singapore, China, and Hong Kong have been actively developing innovation entrepreneurship. The Taiwanese government has also paid close attention to the development of startup teams from the aspects of capital, market, and talent, and begun to relax regulations, invest with the National Development Fund, and cultivate talents. Cheng Cheng-Mount, Deputy Minister of the National Development Council, who runs the National Development Fund (NDF), pointed out that NDF has a strong willingness to support startup ventures. Various measures have been taken, including relaxing the qualification threshold for startup venture applications, relaxing the Angel Investment Program, the Green Channel Program, and expanding the amount of investment. So far this year, 52 startup ventures have been invested, with an amount of more than NT$1.2 billion.

Go Overseas, and Go Globally to Keep Startups Growing

 Ping-Hang Fan, Division VI, Taiwan Institute of Economic Research Deputy Director, pointed out that in the past, Taiwan has lacked statistics on the fund raised by startups. Crunchbase and KPMG in the United States do statistics on this aspect, which is very important for investors. Taiwan Institute of Economic Research's FINDIT research team surveyed the receiving investment of Taiwan's startup ventures in their early-stage. It is found that Taiwan's startup ventures (that were founded since 2010) received a total investment of US$2.3 billion in 792 cases. Most of the invested enterprises were founded during 2013-2016. That is, three to four years after their establishment, the startup ventures start receiving investment from investors. The top three categories of startup ventures receiving capital investment are healthcare technology, enterprise cloud-based computing services, and electronics. According to the survey of FINDIT team, at present, there are 24 private domestic enterprise accelerators in Taiwan, all because of SMEA's cooperation with private entrepreneurship momentum to promote global and corporate accelerators. Among them, the primary core is the large enterprise ecosystem, upstream and downstream relations and resources in the industrial chain that attract startup ventures to cooperate. To encourage venture capital investment and link industrial resources, the SMEA, MEA has also promoted the establishment of Startup Terrace in Linkou and has attracted 11 domestic and foreign startup accelerators to establish their presence, including AWS Joint Innovation Center of Amazon, Microsoft Accelerator, and Yushan Global Accelerator. It is expected to provide entrepreneurs with the necessary upstream and downstream resources, promote cross-sector cooperation, and foster the Innovative development of the industry. Mr. Fan also observed the emergence of more and more enterprise incubators in recent years. Enterprises hope to find future opportunities by investing in startup ventures. However, for the startup entrepreneurs, the key to their growth and globalization is to think about how to solve challenges in a globle, rather than just Taiwanese, perspective.

Soo Boon Koh, Founder and Management Partner of iGlobe Partners, a well-known Singapore venture capital company, quoted PwC's survey and pointed out that the main source of revenue for 71% of Taiwan's startups is the local market, and only 12% of whose revenues are from overseas. Other than thinking about the target market, the startup team chose to start a business instead of working in a large company at the beginning, mostly for autonomy, for being in charge, and for achieving specific goals. Money is not their primary motivation. Startups must think clearly about their positioning because they must compete with other startups for the excellent talents.

For startups, venture capitalists are like their mentors, playing the role of cooperating rather than controlling the startups. They should make good use of the investors' experience and network connection, rather than just to obtain the venture capital they need and become part of an investment portfolio. It is also important to understand whether the areas and experiences that a venture capital firm specializes in can contribute to the development of the startup venture. Soo Boon Koh shared her past interactions with many of the great CEOs and venture capitalists. They will clearly point out which key projects have been completed for the quarter, what is expected to be done, who wants to be contacted, and what assistance they need from venture capitalists. She also reminded entrepreneurs not to do  everything on their own, but to delegate job responsibility and become a leader.

Brilliant Ideas, Good Teams, and Excellent Briefings to Win Fundraising

 Boxful, one of Hong Kong's startup ventures, started with shared warehousing and one-stop online management storage services. In the second year of its founding, it received B round funding and received totaling investment amount of US$26.1 million. It has expanded its market into Taiwan, Shenzhen, and Seoul, South Korea. Boxful currently has over 90 employees. Norman Cheung, Boxful Co-Founder & CEO, shared his experience in entrepreneurship and fundraising. First of all, before raising funds, you should know what your venture capitalist wants, which is nothing but brilliant ideas, good teams, and excellent briefings. He suggested gain some work experience before starting a business. Save money while you study. Because before receiving your funding, you must burn your own money, but don't invest all your savings and don't borrow money. On the other hand, it's important for entrepreneurs to tell stories. During the venture capital briefing, apart from describing the pain points of the problem, statistics, and trends, we also need to be able to put the initial idea of entrepreneurship into moving stories and propose solutions.

The second tip to fundraising is connection networking. Practice socializing with people in a variety of situations, such as Meetup and LinkedIn, etc. You have to set goals of who you intend to know and what ideas to exchange with them; and then complete it efficiently. Don't be afraid to share your ideas with others. Communication can often lead to new inspirations. Third, do your best to meet investors and venture capitalists. The more visits you make, the higher your chances of winning investment.  After the visit, remember to follow up. Some early investors may come back later. In addition, try to diversify fundraising sources, including venture capital, government programs, etc. Finding investors who are relevant to your industry is also more likely to get help. Fourth, some startup ventures have had customers, users, or paid members in their early stage of fundraising. These are all Traction Indicators that are conducive to fundraising and are helpful to increase the valuation of the startup venture. Comparing with benchmarking competitors in the market is also a simple way of valuation.

Following the keynote speech, a 10-minute flash matchmaking meeting was held for 30 groups of startup ventures to meet with 30 angel investors and venture capitalists. Over the past three years, 32 early-stage startups have been successfully assisted in raising more than NT$740 million. This year, 130 startup ventures were once again attracted to sign up for the event.

Photo: Taiwan Institute of Economic Research