InnoVEX 2019 Shows The Opportunity Awaiting Indian Entrepreneurs In Taiwan’s Startup Ecosystem
With Israel having solidified its position as a ‘Startup Nation’, Taiwan is looking to build on its images as the ‘IT hardware country’ and aspiring to be the next ‘Startup and Scale up Nation’ in the world.
In addition to the hardware expo and conference Computex, one of the biggest hardware shows in the world, which Taiwan has been organising since 1981, It has also started organising InnoVEX since 2016. The platform aims to boost the startup and innovation ecosystem in the country.
At the 2019 edition, InnoVEX saw participation from 467 startups from 25 countries and over 18K visitors from across 171 countries.
While the event was jointly backed by the Department of Science and Technology, and the Taiwan External Trade Development Council (TAITRA), DST’s Taiwan Tech Arena led the platform by hosting 79 Taiwanese tech startups shortlisted by its four accelerators.
Showcasing some of the most innovating solutions in the areas of cybersecurity, IoT, robotics, machine learning and artificial intelligence (ML/AI), Taiwan’s startup ecosystem has evolved a lot in the last few years as the event highlighted. Unlike India where the geographical size often hinders the quality and quantity of innovation, Taiwan, after its ‘Economic Miracle’, wants to be a global startup hub in East Asia. And this shone through in the products and PoCs showcased at the event.
Going through the InnoVEX expo one is easily reminded of what author Nassim Nicholas Taleb said in his New York Times bestselling book ‘Antifragile: Things that Gain from Disorder’.,
“In 1960 Taiwan had a much lower literacy rate than the Philippines and half the income per person; today Taiwan has ten times the income.”
Citing the World Economic Forum’s report that Taiwan is one of four “super innovators,” alongside Germany, the US and Switzerland, TAITRA CEO and president Walter Yeh in his keynote address averred, “The technology industry is constantly changing and we are now entering a new era of innovation; therefore we are always transforming and evolving.”
There are a huge opportunity and plenty of reasons for the Indian startup ecosystem to collaborate and deepen its relationship with Taiwan’s innovative startup ecosystem.
Post the economic revolution, Taiwan began to be perceived as the mecca of hardware developments, in the areas of IoT, robotics and electronics. This is neatly reflected in the country’s startup innovations as well. In contrast, Indian startups are largely software driven and hence there is room for the two ecosystems to collaborate and find solutions that work in Taiwan as well as India.
This year’s InnoVEX Forum’s theme was “Connecting Global Startups with Taiwan’s Advantage.” So, what makes Taiwan a hotbed for global entrepreneurs when options such as Beijing, Israel, Shanghai and Singapore also exist?
Let’s delve a little deeper into the advantages, Taiwan offers.
Taiwan Miracle: State-Of-The-Art Infrastructure
Twice the size of Israel and thrice its population, Taiwan is a smaller market compared to China. However, despite being smaller, it counts the better test and research lab environment as an advantage which entrepreneurs leverage to build PoCs. It also has the talent pool, infrastructure, early funding mechanisms, acceleration programmes and government-backed grants to nurture the ecosystem.
The country boasts the world’s largest private high-speed train network which cuts short the travel time across Taiwan to 100 minutes.
With 35,808 sq km of land area, Taiwan is only one-ninth (1/9th) the size of an Indian state Maharashtra. However, unlike Maharashtra which boasts of many large cities such as Mumbai, Navi Mumbai, Pune, Nagpur, Nashik and Aurangabad, and has 6-7 airports, Taiwan has over 15 airports, out of which four are international airports. Further, the airports and high-speed railway terminals are well connected through metro rail, shuttles and buses, and taxis, with end mile journey supported by scooters/bicycles (using bike rental platforms) and two-wheelers.
Taiwan has the world’s one of the most advanced transport facilities in the world, which helps in creating a free flow of goods, talent and services.
High Growth Startup Ecosystem
Unlike Tel Aviv, Beijing, Shanghai and Singapore, the startup ecosystem in Taipei, Taiwan’s capital, does not feature in the top 30 startup ecosystems (Genome’s Ranking) in the world, so how come Taiwan is such a hotbed for budding entrepreneurs?
The answer lies in the same report. It ranks Taipei in the top 25 and top 30 globally in the areas of advanced manufacturing & robotics, AI, big data analytics, which gives it a high startup growth potential. It also has a robust investor ecosystem with around 200 VC funds under the Taiwan Venture Capital Association.
Taiwan has done it differently from the US and Europe in terms of grooming entrepreneurs, said Science minister Chen Liang-gee who has played a key role in strengthening the Taiwanese startup ecosystem. Lee stated that in the US, some start setting up their businesses while still in high school. In Taiwan, starting a business may be more about fulfilling parents’ expectations. That is why young people in Taiwan have received little training or education that steers them towards entrepreneurship, he added. Despite that gap, there are a lot more young people in Taiwan these days, setting up their own businesses with support from the Ministry of Science and Technology (MOST). Many of these have received much attention and acclaim from other economies.
Startup-Driven Govt Policies And Support
In the last few years, along with providing InnoVEX for startups to showcase their products and meet investors, the Taiwan government has taken numerous initiatives encompassing all the aspects pertaining to the startup ecosystem.
Speaking to Inc42, Leonor F.M. Lin, executive vice president of TAITRA, said, “Taiwan government supports startups not only to innovate and grow in Taiwan but abroad too. Under a separate department, entrepreneurs and innovators are provided with all kinds of support which help them build the PoCs and later launch them into the market.”
TAITRA being the nodal agency for the promotional activities has been instrumental in introducing their innovations to the ecosystem.
Along with making arrangements for funding, soft launches in other countries, and actuating acceleration programmes, TAITRA also provides assistance for specific challenges faced by Taiwanese startups, added Lin.
“We keep asking them what is the other assistance they need. One of the usual issues that they face is pertaining to language as English is not our native language. So, Taitra even hosts regular English classes for them. This helps them deliver their presentations across various countries”
Around the world, TAITRA has 63 foreign offices in different countries including India. These facilities also act as temporary offices to the startups who want to expand abroad but have limited capital.
“Besides Computex, we also assist them in participating in different platforms across the world. We further help them in press conferences and connecting with VCs in Taiwan and abroad through our foreign offices,” said Lin.
Hardware Drives Local Innovation
Hardware alone may not create too much value, but if software development is based on extension from hardware, then the results would be more competitive. – Science minister Chen Liang-gee
With the world’s first and largest semiconductor foundry TSMC (Taiwan Semiconductor Manufacturing), and other semiconductor and electronics companies such as United Microelectronics, ASE Technology, Mediatek and Foxconn (world’s largest contract electronics manufacturer), Taiwan’s startup and innovation culture is being led by the hardware-based developments in the areas of 5G, robotics, IoT followed by AI/ML, big data and other developments.
This is in contrast to the Indian startup ecosystem which is largely driven by the IT/ITeS industry. This could also be understood by the fact that in the late 70’s when TCS success helped create Infosys, and many other companies across the country and world, the game shifted after Flipkart and internet companies such as MakeMyTrip unleashed internet consumers as an untapped market for Indian entrepreneurs.
In Taiwan, while the innovation culture has always been skewed towards hardware, in the last few years, there is an increasing blend of soft and hardware technologies, as happened to the Indian startup ecosystem as well.
Taiwan has built its hardware reputation on the back of companies such as Acer, Asus, HTC and Foxconn which have been driving success for global giants Intel, Qualcomm, Microsoft, Google. Taiwan is the biggest Asian engineering hub for Google after it acquired HTC for $1.1 Bn in 2017, while Advanced Micro Devices (AMD) and other companies also have a significant presence in the country. These mega-corporations have helped and participated in the startup ecosystem to boost the culture of innovation.
Funding, VCs And Acceleration Facilities
“Taiwan’s National Development Council has invested $83 Mn in four different venture capital firms to foster local startup growth.” – Genome Report
Similar to the Indian government’s strategy of lending funding support to startups, President Tsai Ing-wen administration in Taiwan is also looking at a dedicated approach to funding for startups. Last year, Ing-wen changed the Company Act, for the first time in 17 years, to let allow startups raise funding with more freedom. On December 29, 2017, the parliament also approved a regulatory sandbox law called Act on Financial Technology Innovations and Experiments that provides fintech startups and entrepreneurs greater freedom while building their PoCs for 1-3 years.
The Ministry of Economic Affairs also introduced a Taiwan Entrepreneur Visa last year, which allows foreign entrepreneurs to have their second home in Taiwan with unlimited entry for one year. The visa could further be extended without leaving the country, which is good encouragement for entrepreneurs from abroad.
Further, in order to attract foreign talent to Taiwan, the government has separately passed The Act for the Recruitment and Employment of Foreign Professionals which offers tax benefits, healthcare and retirement perks to skilled foreign workers.
Lin said that the Taiwan government provides grants, subsidies and incentives at local and national levels. And, much of this is equally applicable for international startups too. Besides these perks, loans are also easily made available to startups under a separate programme, which has further boosted the potential of Taiwanese startups.
“Government support is also critical. In February 2018, the National Development Council launched an action plan aimed at creating a robust startup ecosystem, raising Taiwan’s visibility internationally, and making it a leading startup nation.” — Lin, TAITRA.
While the infrastructure is not an issue, the efficacy and mode of extending the grants and funding has been a challenge in Taiwan too, just like in India. According to TH Tung, chairman of Taipei Computer Association (TCA), the country does not lack capital, but the concern is how to direct these funds into startup businesses that may stand out from their international competitors. Disagreeing with the idea that the government should make a policy to encourage a massive influx of capital into Taiwan, he said that without a clear set of regulations to implement such policies, a lot of the funds would end up not in the tech sector, but rather in the real estate market, shooting up housing prices and creating a bubble in the stock market.
In partnership with accelerators, corporates and investors, Taiwan government has established a Taiwan Tech Arena (TTA) which provides access to acceleration programmes, coworking space and other facilities to the entrepreneurs. At InnoVEX, TTA headlined the events with its 79 member startups participating in the event.
One of the leading TTA accelerators is the Starfab which has accelerated over 100+ startups since its inception in 2016. Speaking about the programmes, Starfab accelerator founder CEO Amanda Liu told Inc42, “We have four startup acceleration programmes which focus on AI, retail, IoT solutions, and robotics. We are currently accelerating 20 startups every year. Besides mentoring, we also lots of resources such as PoC facilities, seed funding, sales channel and technology development for further R&D.”
Many Indian startups had also applied for the programme however, none of them has been shortlisted for the programmes yet, Liu added. On the shortlisting parameters, Liu said, “We look for co-competence, core team capability and model.”
The accelerator plans to go abroad as well, and enter countries which are Taiwan’s regional partners.
The Huge Taiwan Opportunity For Indian Startups
While India has been an investment destination for the entire world, and in recent years, the US, Europe, Australia, the Netherlands, Estonia, Japan and many other countries have exclusively collaborated with Indian state and central governments with key focus on startups, Taiwan and India are yet to come on the same page, as far as startups are concerned. Perhaps for political reasons — (People’s Republic) China’s one China policy — and resulting in a longstanding dispute with the Republic of China (Taiwan) over sovereignty.
Interestingly, at Computex 2019, while India was among the top 10 visiting countries, out of 467 participating startups, not a single startup was from India, despite it boasting over 39K active startups.
Lin said this will change in the years to come with an increased focus on making inroads in the Indian market, “We have a lot of counterparts in India. India is a very important market for us. This can also be understood by the fact that our chairman visited India last year more than 10 times. We have four foreign offices in India and we would definitely like them to come and join InnoVEX. Just yesterday, we have signed an MoU with the ICTF, Gujarat.”
More such inter-government deals can help give Indian and Taiwanese startups greater impetus in each other’s markets. The big question and obstacle for the new Narendra Modi government is whether India’s startups can bypass China’s influence on the ecosystem and extend a warm hand to the Taiwan government’s efforts to collaborate.
Disclaimer: The writer of this article was in Taipei on a sponsored trip by TAITRA.