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Investment in innovation benefits both investor and startup

Ambrose Huang, DIGITIMES, Taipei 0

Wistron attaches great importance to innovation, both within the company and outside of it, according Eric Wu, vice president of Wistron's CVC Office. Since 2010, Wistron has participated in startup activities and investments including Garage+, AppWorks and the Asia America Multi-Technology Association (AAMA). As times change, so have Wistron's investments and partnerships goals. While Wistron focused its investments in verticals related to its existing business units from 2010 to 2015, we began investing in new fields, such as health care and the internet of things (IoT), from 2016 to 2020. Wistron hopes to further develop its health care business.

Entering its third phase in 2021, Wistron has become more willing to invest in fields less related to existing business units. While there is no marketization in the short term, these technologies and teams could become relevant to Wistron's business development in the next five to eight years.

Wistron recently established a vertical accelerator program to work more closely with and provide Taiwan-based startup teams with the resources needed for growth. Doing so will raise the accuracy of our startup investments.

Vertical accelerator helps deepen interaction with startup teams

In the past, the average accelerator program accepted a wide range of startup teams. More recently, though, accelerators have started emphasizing certain fields. Operating methods have become more meticulous, and businesses are working more closely with the startups.

Business participation in our vertical accelerator program provides startups with the domain know-how required to grow. Furthermore, since companies provide resources such as field verification, participating startups can actively carry out operational verification of products and services. Wistron is currently focusing on the artificial intelligence (AI), IoT, cloud and cybersecurity fields. Selected teams will receive resources from Wistron, as well as field verification.

Wistron has always focused on interacting with startup teams and maintaining communication channels with the startup community in Taiwan. Through regular meetings, we introduce startup teams to our senior executives. Not only does this help startups launch their business, but it also provides our senior executives with new ideas.

Whether it is through our previous cooperation with Garage+ or the accelerator with AppWorks, the ideas behind both are the same. Wistron hopes the vertical accelerator can help startup teams find research and validation sites. Wistron will also provide special assistance to startups based on their field.

Innovation can come from anywhere

Innovation propels Wistron to grow, regardless of where the innovation comes from. Startup teams have a lot of innovative ideas, but innovation requires expert experience to be realized as a product or a service. Established companies have a lot of experience, make decisions more carefully, have complete SOPs, and can provide startup teams with more in-depth suggestions. Taking a product from 0 to 1–from concept to sample–is not difficult. However, going from 1 to 100 - from sample to limited production - is a challenge. That is why Wistron established the Innovation Integration Center (IIC) to help startups enter limited production.

In addition to IIC, the Value Creation Center (VCC) at Wistron carries out internal innovations from its business units and develops technologies not immediately needed through its senior engineers. Although VCC is based on internal teams, it still seeks external resources to develop internal projects. These internal and external channels bring a synergy of innovations to Wistron.

Understanding CVC and the investing company

Wistron has made a relatively high proportion of startup investments in Taiwan. Venture capital is a localized industry, and we carry out startup investment through a 5-6 member corporate venture capital (CVC) team. In addition to pre-investment assessment, post-investment management is an even bigger challenge.

All CVCs are based on corporate strategy. The hope is to invest in teams that can bring out synergies. If the startup does not succeed, producing synergies will be difficult. That is why even if a CVC startup investment is not made for financial purposes, the profit potential of the startup is still an important investment indicator that companies must consider.

Companies must understand it takes longer to see results from investments in innovations, and they must be willing to wait it out to create a culture of innovation. Wistron can continue doing this type of work thanks to the support of our chairman and general manager.

Regarding CVC, rational analysis is needed when assessing individual cases. The CVC team members should have diverse backgrounds, including finance and technology. This way ideas are looked at from multiple angles instead of just one, and decisions are made rationally.

Companies generally attach great importance to innovative activities. Wistron attaches great importance to external startups, but sometimes support for startups does not meet the expectations of the startup teams. Startup teams also need to understand the company. The scale of a mature company is supported by a strict system. For this reason, resources cannot be provided as easily as startups imagined.

Companies also have different perspectives from startups to consider. It may not be that easy to utilize good products developed by startups. This is because companies have a certain legacy that not only considers the value startup products can create but also the total cost of ownership including switching costs.

By participating in the accelerator, Wistron can more closely observe startup teams, increase the success rate of its investments, and increase mutual trust in the process. This time we are being more cautious when selecting startups. By doing so, we hope to increase the opportunity for success and believe that more businesses will join in the future.

Wistron

Eric Wu, vice president, Wistron CVC Office, says his company has been investing in startups since 2010. In addition to investing in verticals related to existing business units, Wistron is also looking at less related business units. While there will be no marketization in the short term, the technologies and teams could become relevant to Wistron's business development in the next five to eight years.
Photo: Wistron

(Editor's note: Readers can download "2021 Taiwan Startup Ecosystem Survey" jointly conducted by PwC Taiwan, TIER and DIGITIMES: https://www.pwc.tw/en/publications/taiwan-startup-ecosystem-survey.html)

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