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Taiwan Startup Ecosystem: 2016 Survey Results


Taiwan's startup ecosystem has gradually come together over the past few years.

Taipei City, in particular, has experienced a flourishing of entrepreneurial activities.

Nevertheless, the landscape in which Taiwan's Internet technology entrepreneurs and investors operate is still not very clear.

In view of this, the Taipei-based Business Next Media Group initiated the Taiwan Startup Ecosystem Report two years ago, hoping to paint a better picture of Taiwan's current technology startup landscape.

The survey was first done in 2015, and its scope was expanded in 2016, and included two sections: one for entrepreneurs and one for investors.

The survey showed that the most significant challenges for Taiwanese entrepreneurs are:

**fund raising (44.5%), market expansion (41.8%) and talent recruitment (39.1%). **

The survey indicated that most entrepreneurs in Taiwan have to rely on their own funds.

Personal savings were cited as an important source of funds by 95.1% entrepreneurs use funds coming from their own savings, while only 13.8% of founders had received funds from venture capitalists.

Entrepreneurs have met with many venture capitalists, with 64.9% reporting dealing with more than four, while 37.0% had dealt with more than ten. Garage + Manager Lu Zhixuan said, "many startups need to deal with 20-30 venture capitalists before finding a suitable match.”

Seed funding gaps in Taiwan

The survey also revealed seed funding gaps in Taiwan’s startup scene. Founders struggle to connect with appropriate investors in part because of a lack of active angel investors in Taiwan, as well as an absence of high potential late-growth startups.

Over the past three years, angel investors and venture capitalists have shown little interest in funding internet startups, with only about a dozen cases identified over that time in the survey.

At the same time, 66% of the survey’s startups (220 in total) are looking to raise funds in the coming years.

Among entrepreneurs, 89 (26.8%) received external investments in the 2015-16 period. Most of these were involved in the sectors of e-commerce, intelligent hardware, cloud computing and big data.

Among investors, 36 were most likely to invest in products and/or services that were in the fields of big data, smart home and cloud services.

This indicates that e-commerce, creative industries like media and entertainment, or other internet startups, face a more challenges when working on fundraising.

The survey also shows that Taiwan's entrepreneurs tend to be older, mostly between the ages of 31-35, compared to young Millennials that tend to dominate in China.

The survey shows that 60% of the entrepreneurs are married, and that one-third run their startup with their spouse or partner. The survey found that 70% of these are bothered by complaints from their spouse/partner. The most common complaint is that they do not take care of their bodies. However, in fact, most entrepreneurs have the habit of regular exercise. But the survey found that many entrepreneurs are still lonely, and that the pressure of fund raising is what most keeps them up at night.

Taiwanese entrepreneurs are looking at overseas markets

The Business Next Media survey found that 42% of entrepreneurs hope that Taiwan’s government will loosen out-dated laws and regulations, while 21% hope to see an increase in government subsidies and 14% hope the government will help Taiwan’s startups expand overseas.More than 70% of the entrepreneurs indicated an intent, or plans in place, to expand overseas.

More than 40 startup-related programs have been initiated by Taiwan’s Ministry of Science and Technology, the Small and Medium Enterprise Administration of the Ministry of Economic Affairs, and the National Development Council.

In the 2016 survey, more than 40% of entrepreneurs are most interested in startup ecosystem developmental issues, such as industrial policy, overseas market opportunities, emerging technologies and fund-raising.

According to a recent report on Taiwan’s mergers and acquisitions (M&A), the majority of the Taiwan’s M&A consisted of foreign investments in Taiwanese companies. For example, Taipei-based startup Storysense Computing was acquired by China’s Dianhuabang, and MimiCam was acquired by the Asia Innovations Group (AIG), a global mobile internet company.

Taiwan's internet startup M & A and overseas investment teams are gaining speed in terms of expansion into international markets.

Examples of this include
1) Pinkoi’s acquisition of the Japanese e-commerce platform iichi and its entrance into the Thai market.
2) General Mobile’s (GMobi) acquisition of Israeli mobile advertising firm MassiveImpace and India’s Payplutus.
3) the opening of Singaporean offices by ICHEF and HelloWings and
4) entrances into the Japanese market by VMFive, Action Bego and VoiceTube. Looking ahead to 2017, this trend looks set to continue, with the survey indicating that entrepreneurs view the most promising markets to be Southeast Asia (48%), China (24%) and the United States (13%).

Lastly, the survey shows an issue with a talent gap in Taiwan’s startup scene in terms of difficulties in finding highly qualified technical talent.

Top graduates still prefer to work for large corporations, and don’t have experience in the startup industry. Over the past year, new startup hires are up by 53%, with a total increase of 1,829 employees at 175 companies.

Looking at the coming year, 72% of the entrepreneurs intend to expand the size of their team,35% would like to recruit software engineers, while 21% are looking for business development staff and 18% are looking to increase their marketing teams.

The survey was conducted last year from September 22 to October 10, and was done in primarily by email in collaboration with Meet and survey company SurveyCake.

Business Next Media recently published the survey results on its news website.

A variety of organizations, business units, startups, accelerators and research centers contributed to the survey, These included 500Startups, AppWorks, the Asia America Multi-Technology Association office in Taipei, KKfund, Garage +, Girls in Tech, the National Development Council, the Small and Medium Enterprise Administration of the Ministry of Economic Affairs and the Taiwan Startup Stadium.

The Entrepreneurs survey was conducted mainly among Taiwan’s small-sized Internet technology startups.

The respondents were required to meet at least one of the following conditions:

a Taiwanese founder, a Taiwan-registered company or a company headquartered in Taiwan.

Questionnaires had to be completed by the founder or CEO of the company. A total of 332 valid questionnaires were completed.

The Investors survey was conducted among those who had invested in a technology startup within the past three years.

These included angel investors, venture capitalists and business accelerators. A total of 36 valid questionnaires were completed.