Interview with Lee-Feng Chien: The Best Time for Taiwan's Startups

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With the COVID-19 pandemic, demand for zero-contact business opportunities and digital transformation have grown exponentially. This led to new opportunities for innovation and entrepreneurship. The number of international unicorn companies now stands at more than 700. Lee-Feng Chien, former managing director of Google Taiwan, shared that this year, Taiwan's software startups have achieved good results in the capital market. He encourages startups to seize the opportunities to fundraise in the international market, break through national boundaries, and boldly expand into overseas markets.

Chien is currently the director of iKala Interactive Media Inc. and an independent director of Appier Inc. Since retiring from Google, he has devoted himself to supporting startups. In an exclusive interview with theMOST Center for Global Affairs and Science Engagement, he talked about his long-term observations and coaching experience with startups. He suggested that when selecting a focus, startups should make good use of the advantages in Taiwan’s hardware supply chain and think in the direction of software and hardware integration.

The best time to raise funds for new ventures

Two startups, Appier Inc. and 91APP, were both listed this year, bringing a lot of positive encouragement to Taiwan's startup environment. As Chien said, the digital economy was still a very new concept in Taiwan 10 years ago. The funding raised by all new ventures totaled less than NT$200 or 300 million a year. But over the last 10 years, the advantages of capital, talents, and internationalization have all been gathered in one place. Today, it’s not a problem for a single startup to raise NT$300–500 million in investment.

To his knowledge, ten digital startups in Taiwan have received tens of billions of NT dollars in investment over the last year. What these startups share in common is that they all looked abroad. Some sought out specific overseas markets in Japan and Southeast Asia, while others reached out to the entire world directly. This is also a symbol that they received recognition from the foreign capital market.

Chien pointed out that, as we are working through the pandemic, international capital is becoming more willing to invest in startups. Funds have been diverted from China and the United States; and Taiwan’s anti-pandemic efforts in 2020 have put Taiwan on the map. As a result, not only have Taiwan's startups taken advantage of the new opportunities presented by the pandemic, but the current situation presents the best opportunity in a decade. The time is now to raise capital.

Taiwan +1: Boldly venturing into overseas markets

Chien believes that to open broader markets, startups need to be prepared and ready to venture overseas from their day one of establishment. Taiwan lies at the center of China, Southeast Asia and Northeast Asia. It is the only place outside of the Chinese market where the main language is Mandarin. If startups become proficient in Chinese and English and use the Internet, more countries with large digital populations such as the Philippines, Vietnam, Indonesia, Japan, and South Korea can all be within reach through the internet.

Chien proposed the “Taiwan +1 Strategy”, in which to have Taiwan as the home market, startups should expand into one additional overseas markets to break through the limitations of Taiwan’s excessively small market. Doing so could increase the opportunities of developing into unicorn. For example, iKala Interactive Media Inc. targeted the Southeast Asian market, and Appier Inc. became listed in Japan this year. 

Chien took his analysis a step further: He believes that Taiwan's startups have considerable advantages by developing in Japan. At the moment, Japan could serve as an important first step for overseas expansion. Japan has a population of more than 100 million; but among the more than 700 unicorns in the world, only 4 are in Japan. The few numbers of unicorns in Japan lead to less competition for capital. Moreover, Taiwan has a Chinese and English niche. Therefore, to develop a B2B high-end service industry, Japan could be a target.

To develop in the manufacturing industry, given Vietnam’s large population and the exodus of the manufacturing industry from China, Chien suggested that Vietnam could serve as a major hub. Those in an English-speaking service industry should plant their flag in the Philippines market, because it is a country with the largest English-speaking youth population in the world. English has a high degree of prevalence in the Philippines; in recent years, it has become the center for many multinational companies’ call centers, surpassing India to become Asia's largest business country for Business Process Outsourcing.

Integrating software and hardware; giving full play to Taiwan's advantages

Taiwan’s hardware supply chain is unique in the world. Chien emphasized that “only when you offer advantages will you receive investment.” Taiwan has long had an established manufacturing foundation. Future startups should make good use of Taiwan’s advantages in semiconductors, and in the information and communications industries. They should think in the direction of software and hardware integration, expand into the AI ​​and big data industry, and boldly venture out into the global market.

Startups should focus on seeking out “tomorrow's business opportunities” and select industries with the fewest unicorns; this is where the business opportunities will be found. These industries include aerospace technology, electric vehicles, and smart medical care; all are blue oceans for development. Chien said that just as Taiwan's strengths in medical care and information technology form the core of smart medical care, if the services, software and online to offline are well integrated, Taiwan’s startups would have a brilliant prospect.

Chien is optimistic that as long as there are more success stories, Taiwan’s startups will be noticed by international capital. When investing in Taiwan’s startups becomes a new option in the international investment and financing market, more opportunities will follow, thus creating a positive cycle for Taiwan’s startups in the digital economy. 

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