Mucker has confidence in Taiwanese B2B SaaS startups

Ambrose Huang, DIGITIMES, Taipei 0

Asia representative of Mucker Capital, Jerry Chen

In terms of Taiwan's entrepreneurial environment, Mr. Jerry Chen, an investor in Mucker Capital for the Asia Pacific region, is of the opinion that Taiwan has very little visibility in the international market in terms of software entrepreneurship, including in Software-as-a-Service (SaaS) solutions. To date, Taiwan has not produced any iconic company in this industry. Nevertheless, based on its past experiences in ICT, semiconductors, and manufacturing, as well as its pool of outstanding software developers, Taiwan is in fact equipped with the potential to develop B2B SaaS products. In this sense, by assuming the roles of a venture capitalist and an accelerator, Mucker Capital not only provides seed capital, but also helps startups overcome growth bottlenecks and accelerate their growth toward the next phase.

In 2022, MuckerLab was established in the Taiwan Tech Arena (TTA) and began to recruit startup companies from Taiwan and the Asia region.

Mr. Chen also pointed out that in the initial stage, startups should focus on building their products before the pre-seed round. Following the seed stage, they should enter into the product/market fit stage. For the early stage, Mucker suggests startups to focus on building customers, and finding demand and market.

Currently, Mucker does not limit its funding to any particular industry in terms of investing in early-stage startups. However, given Taiwan's economic and industrial environment, startups in BSB SaaS services will possess more growth advantages in vertical industries such as logistics, manufacturing, and information and communication. Nevertheless, startup teams should accurately understand the pain points of their respective industries. Particularly for the vertical B2B SaaS market, a startup team will only have access if it can find the right pain point and achieve a scalable business in the market.

Speaking of funding activity in Taiwan's entrepreneurial ecosystem, Mr. Chen also commented that it is an undisputed fact that Taiwan does not have ample resources designated as seed capital for startups. The market is also subject to various constraints. Although a small market has its merits, it also limits the estimated value and development of a startup. For a venture capital, a startup can only have access to more diverse exit strategies if it is capable of solving bigger problems.

Therefore, as a VC firm who invests in seed capital for startups, Mucker is dedicated to securing international resources and funds from North America, Asia, and Europe to assist startups to expand overseas and develop the global market.

Mr. Chen also mentioned that as a venture capital firm from the United States, Mucker will certainly take "market size" into account when considering its investment portfolio. Similarly, this is also one of the first and foremost factors to most foreign venture capitalists before making an investment.

Although for certain industries, economies of scale may be achieved in the Taiwanese market alone, more often than not, the Taiwanese market environment tends to constrain the business mindset for managing the international market. Thus, Mr. Chen believes that if a Taiwanese startup wishes to obtain seed funding, it has to turn to the market overseas. To achieve this goal, visiting those markets in person is a necessary process. After all, even in a country as small as Taiwan, customers located in Taipei and Kaohsiung would still potentially differ in terms of business style, corporate culture, and market demand, not to mention the overseas markets. This is also the reason why Mucker continues to emphasize the importance of connecting with foreign resources.

Speaking of expanding in the international market, Mr. Chen indicated that a team needs to find out which market offers more room for growth in terms of the pain points that it could resolve. Moreover, the said market has to be big enough in terms of market size. Once the target market becomes clear, a team needs to have the determination and a crew who can take root in the market over the long haul. This is the only way for the team to assimilate into the local environment, understand the market needs and the rules of the game, and grasp local rules for development, before it can build up local networks, thereby making effective business development progress.

Meanwhile, Mr. Chen believes that the impact that the global economic developments have on early-stage startups would be limited. This is because early-stage startups need to mostly focus on developing products and customers. Basically, venture capitalists and others will continue to invest as long as their products are robust. For instance, Mucker continues to pay attention to developments of startup teams and makes investments in them proactively.

However, for teams with fundraising needs, they may feel the pressure at this point. On the one hand, market investors are taking longer to evaluate the startups. On the other hand, they are also rethinking, evaluating, and even lowering the value of the startups. All these factors will affect their fundraising performance. In other words, market investors will focus more on the business operations of the startups. Therefore, for startups with product capability and a sound operation, as long as they can withstand the current economic fluctuations, there will be more opportunity and room for growth.

Many startups in Taiwan must pay attention to their own technologies and product developments. Under the current trend, they should strengthen their business operation skills and establish their sales and marketing mechanisms, so that they can in fact embrace greater development opportunities in the future.

Readers can download " 2022 Taiwan Startup Ecosystem Survey" jointly conducted by PwC Taiwan, TIER and DIGITIMES: