Supply chain
How does Taiwan become startup hub in Asia?
By Meng-Hsin Yang and Chia-Ning Chou, special to DIGITIMES

What players the hub should have is critical to the issue in discussion. The first and foremost important thing is the right attitude. Language proficiency is an essential skill to startup teams. Just being able to communicate when making initial contact is sufficient but when it comes to business negotiations, it is important to maintain professionalism and employ professional services. They also need to be able to grow internationally. The second category of players will be investors from home and abroad including international venture capitalists (VC), multinational corporations and incubators. The third category of players will be government agencies that are willing to communicate and get their hands dirty. The fourth category of players will be traditional and non-traditional media publishing content in multiple languages and other startup ecosystem partners capable of making international connections.

After we are clear about the players, we need to figure out how to bring them together to engage in interaction and communication on a scheduled or unscheduled basis so that the hub can take shape and carry on. The following discussion is directed at how Taiwan can become a startup hub, including a description of the issue and a summary of the approaches to improvement and implementation.

An approach to infrastructure improvement: event + research + multi-language proficiency + multi-theme

Participation in events is the most effective way to make connections and engage in communication. However, an event's target audience, theme, nature and marketing campaign are critical to its success. Before holding an event, the organizer should establish who the target audience (TA) will be, how they can be reached and what the expected effect and influence will be. It must be based on a certain amount of data or research work. Afterwards, the organizer should keep track of the event data in the long run to help improve and perfect the planning of future events.

RISE (affiliated with Web Summit originally held in Ireland), TechCrunch Disrupt SF, SLUSH, Tech in Asia and Startup Thailand are some of the show events maintaining a complete collection of participant data and exhibition statistics throughout their history. In Taiwan, leading event Meet Taipei, followed by Findit and Digitimes platforms, also gathers data on the Taiwan ecosystem through events. This is part of soft infrastructure buildup. Each event organizer has its own strength and advantage. Multi-language dissemination of information, such as updates on success stories of the Taiwan startup ecosystem, statistics and analyses on technology and investment trends as well as industry dynamics, will be Taiwan's first step to becoming Asia's startup hub and a continuing effort going forward.

It is costly for visitors to come to Taiwan from abroad, so it is important that their itineraries are arranged effectively and efficiently. Enabling them to gain an understanding on Taiwan's culture and characteristics in their main activities or engaging them in other international or local events will add values to their business trip to Taiwan. To achieve such a purpose, a one-stop information platform plays an essential role. Furthermore, precise planning for TA interaction is imperative especially for events where multiple themes synergize.

Take Computex and InnoVEX for example. Computex is attended mostly by vendors, manufacturers and traders who are in search of orders so the Computex venue is full of people who work in business development (BD), marketing, distribution and sales. InnoVEX, on the other hand, targets early investors, startup firms and high-tech professionals. The goal is for the two groups to actively interact. That is, medium and large corporations should have a chance to interact with small and innovative firms to create win-win situations for both. However, a close analysis on the events held so far will indicate that a major role is missing – PMs of large corporations. PMs are those who know best whether a startup will be able to collaborate well with their corporation. As such, the event organizer should mull how to draw PMs to InnoVEX.

Let's first be clear on one thing: investor + startup ≠ investment

A good deal can attract investors. However, whether an investment can actually happen depends on the decision of different types of investors. Angel investors usually care more about the team members, their development potential, social contribution and minimum viable product (MVP). VC or incubators consider more aspects including people, funding, market and technology. From the people perspective, they look at the team, development potential and external partnerships/liaison skills. From the funding perspective, they examine finances, capital size, shareholding structure, exit mechanisms, valuation and previous round of investors. From the market perspective, they evaluate the business model, profitability, market positioning, competitors, product or service competitiveness, social contribution, product/market fit (PMF) and corporate/industry risks. As to technology, they assess the patent/technology strength. Moreover, VC or incubators also take into account the fundraising condition, limited partner (LP) preferences, project schedule planning, return of investment, business connections and resources, industry trends, technological edge, macro environment and government regulations.

In the case of corporate venture capital (CVC) or strategic investment from large enterprises, they examine a startup based on the team, development potential and external partnerships/liaison skills from the people perspective. From the funding perspective, they consider finances and previous round of investors. From the market perspective, they evaluate business model, PMF, market positioning, competitors and corporate/industry risks. Lastly, for technology, they assess the patent/technology strength and relevancy to CVC/large enterprise's own development direction. They also examine their own purpose, expected return, payback period, industry trend, technological edge and macro environment.

From the above brief summary, except in the case of angel investing, an investment deal is generally considered from multiple perspectives and things can get so complicated that there is no one simple golden rule. Each case of a startup successfully securing funding is unique. To plan startup investments systematically, government agencies must take the lead or a large venture capital firm like Sequoia Capital takes the initiative to strategically fund an entire industry chain with promising potential.

What the government can do is to expedite the buildup of an ideal investment environment. For example, it can aggregate regulations and information resources and make them available while putting efforts into the construction of software and hardware infrastructure so that high-quality startups can raise their visibility and accelerate growth and then good investment deals can come into place. Furthermore, the government can also work with media firms to publicize Taiwan and attract international attention. With the business environment continuing to improve, startups can focus on what they do best.

Frontline government officials should join the battle

Frontline government officials in discussion herein does not refer to high-ranking officials (bureau directors and above) getting involved in event participation, forum speeches and communication with startups and investors at home and abroad. Instead, government agents one or two levels lower in the ranking including official representatives or PM, section chiefs and team leaders should be committed to getting their hands dirty. Foreign startups and investors need an efficient way to stay aware of available resources and information. It would be best if government agencies in charge can appoint official representatives to make direct contact with them. Moreover, getting government agencies involved in the communication will enable them to gain in-depth understanding on what attracts foreign people to Taiwan or what hinders their development in Taiwan.

Taiwan's government agencies currently engaged in guiding startup development include the National Development Council, Ministry of Science and Technology, MOEA Small and Medium Enterprise Administration and Financial Supervisory Commission. In addition, Taiwan Start-Up Hub is a startup cluster supported by the Executive Yuan that provides startup courses and hosts a startup community, aimed to deliver and exchange startup information.

Moreover, there are Taiwan Startup Stadium (TSS) and Taiwan Innovation and Entrepreneurship Center (TIEC), which specialize in connecting people and businesses internationally. Governments around the world are endeavoring to foster their startup scene by instituting laws and regulations to help build a solid foundation. It is particularly important that startup policies are effectively conveyed to startup teams. By providing startup teams a one-stop service integrating all startup resources will help them save the time and effort of having to search for information on startup subsidy or assistance programs and thereby maximize the benefits of the resources.

The media will be the best startup ecosystem partner helping them connect to the world

Professional media firms are experts at precisely grasping information and TA while they may not be good at being "broad" and achieving "cohesion." Non-traditional media, such as social networking sites and YouTube, are characterized by targeting a specific area and having strong cohesion. As such, different media may have different views on the same subject. Professionalism and cohesion can be manipulated through marketing efforts. Taiwan, looking to become a startup hub, lacks such marketing ability.

In other words, international marketing and connection should be the common goal for the entire startup ecosystem. Startup teams, early investors (e.g. angel investors and VC), government incubators, private incubators, startup contest organizers, startup communities, large enterprises, media and other supporting entities (e.g. financial advisors, lawyers and accountants) should all work together toward the goal so as to foster an open startup ecosystem, which will in turn kick start a positive cycle pushing Taiwan toward becoming Asia's startup hub.

To sum up: Satisfying needs

For Taiwan to become Asia's startup hub, the first question to ask is why startups should gather in Taiwan. What does Taiwan have to offer to draw international investors, large enterprises, startups and media? Then the question is how. Simply put, the answer is to "satisfy needs." Investors need investment targets. Startups need partners and investors. Large enterprises look for future partnerships and new technological applications. International media need hot topics.

Take the five roles for example. They have needs from one another and also provide for one another. To do matchmaking among them, more thoughtful planning and execution as well as precise coordination and arrangement is required. Through data collection and analysis, the preferences and needs of each group can be better understood. Through active and passive information dissemination, Taiwan can develop a positive image among the international community as startup hub. With partnership and investment deals being made one after another, the hub can continue to flourish.

(Meng-Hsin Yang and Chia-Ning Chou are assistant researchers at Taiwan Institute of Economic Research)

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