Taiwan seed accelerator: Taiwan start-ups’ future is in mainland China
Taiwan Accelerator says the mainland must be the ultimate consumer market for start-ups
New start-ups from Taiwan, where the entrepreneurial environment is lacklustre, should shift their focus to mainland China where there are abundant opportunities and capital, according to an industry veteran who recently started investing in start-ups.
“There is a [longstanding] culture that works against Taiwanese entrepreneurs as the government and people have the tendency to want to build up huge enterprises to fend off external competition ,” Richard Kang, a partner at Taiwan Accelerator, which claimed to be the only seed accelerator in Taiwan, told the South China Morning Post.
“So for people who grew up in Taiwan, they tend to work in the government, or HTC and Taiwan Semiconductor.”
Kang said he rarely heard of any successful start-up stories in Taiwan, where there has been a severe lack of mentors and investors in the past few years.
On the contrary, there was energy and drive in the mainland market, despite the stiff competition among start-ups to be the next industry leader, he said.
Taiwan Accelerator was founded in 2016 and began operation in February.
It has picked eight start-ups out of 153 applicants in the first cohort – seven from Taiwan and one from India – to be granted seed capital and mentorship that covers a variety of aspects, including building the business model, developing products to be market-fit, know-how in finance, accounting, legal areas, and media relations.
It has also hosted the Taipei Demo Day on April 13, followed by a one-week investor roadshow in the United States for the selected Asian start-ups.
Among the eight investments, a healthcare e-commerce company, MediU has attracted over US$330,000 in investments, while another hospitality chain and online travel agency, Mean Yu has secured some US$200,000 from various venture capital investors.
Kang said the mainland needed to be the ultimate target consumer market for Taiwanese start-ups because the island with its 23.5 million population, did not have the scale to propel them to success.
TSSE, another start-up in the first batch, was spearheading a project to kill insects using natural means instead of chemicals to create a toxic-free food supply chain, and would fall in line with the Chinese government’s anti-pollution initiatives, he said.
While tech companies in the mainland attracted a record US$56.1 billion in disclosed investments in 2016 according to media reports, Taiwan’s economic growth has been lukewarm, clouded by increasingly sour cross-strait relations.
In 2016, Taiwan’s gross domestic product (GDP) was NT$15.86 trillion (US$521 billion), compared with 1.94 trillion yuan (US$287 billion) for Shenzhen city alone, which is home to numerous technology start-ups.
Kang said he had repeatedly reminded Taiwan’s young entrepreneurs to be open-minded and aggressive, while also urging them to be vigilant of the competition from the mainland, where people might have copied their ideas even before they had established a foothold in the market.
“There is nothing wrong with copying, but Chinese companies are very good at copying fast,” said Kang.
“I tell Taiwanese entrepreneurs all the time that they had better make sure their products are good, or at least good enough, and once they come to China, they also need to go fast.”
Taiwanese start-ups should also consider establishing a mainland subsidiary, or teaming up with a local company to be clued in to avoid potential regulation risks arising from Chinese government controls on capital outflows, Kang also said.
He added that they were also planning to replicate the Taiwan Accelerator in China, possibly in Beijing in the near future.