Taiwanese startups can no longer involve in "me-too" or "me-better" businesses, but must plan ahead and develop "me-only" technologies. The reasons are because the scales of Taiwanese venture capital (VC) and local market are limited, and does not have an advantage in demographic dividend. Mr. Michael Kao, President of Taiwan ITRI New Venture Association (TINVA) said that environmental, social, and governance (ESG), pharmaceuticals, smart manufacturing, and the semiconductor industries are some of the cutting-edge technologies that Taiwan should plan ahead and invest in. Given Taiwan's complete information and communications technology (ICT) industry chain, there is a good chance that Taiwan can gear to become a key hub for innovations and startups for the Asia Pacific region.
Mr. Kao pointed out that the government can consider a more proactive policy in providing concessions to startups producing cutting-edge technology. This is to encourage enterprises in adopting an operational model for external use of innovation. The government can assist enterprises to transform and achieve diversified developments while accelerating the development of innovative competencies in Taiwan. Mr. Kao has also pointed out that Taiwanese enterprises should be more proactive in investing in external use of innovation. He recommends enterprises to allocate 5% to 10% of their annual earnings for collaborations with mainstream venture capitalists both at home and abroad to make investments in external startup.
Mr. Kao commented that finding ways to establish Taiwan as a base that is "friendly to international startups that wish to expand into the Asia Pacific region" is a pressing matter that the government should give serious considerations to.
Currently, the semiconductor industry remains Taiwan's strength in industry. It continues to present a fairly substantial development potential for the future, whether in the upstream materials and production of precise machinery, or IC design and compound semiconductors.
Additionally, environmental, social, and governance (ESG) investing is also an area that Taiwanese enterprises are keen to engage in. Concerns for ESG has driven up the developments and needs for carbon neutrality, circular economy, new energy, electric vehicles (EV), batteries, energy storage, and a ban on plastics, all of which are areas that Taiwanese startups should pay attention to and invest in.
Based on the existing footing in the ICT industry, technological developments, and talents, coupled with numerous advantages including an assortment of excellent medical and healthcare professionals in Taiwan, medical equipment has become another key area of innovation for Taiwanese startups.
Besides semiconductors, ESG solutions and medical equipment, digitization and artificial intelligence (AI) in the manufacturing industry are also forthcoming trends that Taiwanese teams should focus on. As the severity of labor shortage problems will continue to rise in the future due to low birth rate, labor costs will inevitably continue to rise. The demand for automated production around the world will become even stronger. Compounded by net-zero emission issues, smart manufacturing will become a key trend in industrial developments going forward.
Mr. Kao believes, the Taiwanese government and enterprises must plan ahead and seize the historic opportunities of the China-US trade war and the boom in innovative technologies over the next 20 years with a strategic mindset and pioneering thinking. The government should proactively collaborate with leading VCs from home and abroad in either investing in or acquiring innovative technology firms to plan for key technologies over the next decade.
Mr. Kao pointed out that recessions are high time for making investments for the future. He highlighted that during a downturn in the capital market, valuations of startups tend to be more reasonable. Thus, now is the ideal time for investing in them. By proactively collaborating with leading startups from Taiwan and overseas, Taiwanese enterprises will lead startups to entering the Asia Pacific market in the future. At the same time, Mr. Kao also welcomes leading foreign startups to set up operations in Taiwan by using manufacturing resources in Taiwan and the market resources of the Asia Pacific region. This will make Taiwan an important base for entering the Asia Pacific market. Going forward, it is highly likely for Taiwan to become one of the key hubs for innovation in the Asia Pacific region due to its competitive edge in being an open and free technological center.
Readers can download " 2022 Taiwan Startup Ecosystem Survey" jointly conducted by PwC Taiwan, TIER and DIGITIMES: https://www.pwc.tw/en/publications/taiwan-startup-ecosystem-survey.html
Chairman of TINVA, Michael Kao