Although only a few hours flight from Beijing, Taiwan has a very different start-up environment.  With a population of 23 million, Taiwan has often been labelled too small to have a start-up business that makes an impact on the world stage. Interestingly though, is the fact that there are many Taiwanese entrepreneurs who have been educated outside Taiwan and made it hugely successful. Some key examples are Dr. Kai Fu Lee, CEO of Innovation Works, Steven Chen Co-Founder of Youtube and Tony Hsieh, CEO of Zappos. This suggests that if you want to make it big, get out of Taiwan – the market is too small.

My friend in Taiwan (who is from America) made some interesting observations about the Taiwanese start-up market and its trends. Taiwan has a long history of being a big electronics OEM manufacturer to the world. Brands such as Asus, Acer, HTC and BenQ all originate from Taiwan. The dominance of these established technology companies in Taiwan has lead to roughly 75% of the population working in the technology industry. Young people graduating from college usually take the safe path and join these large companies. Often large technology companies in Taiwan have small divisions dedicated to start-up like projects, where employees can test their ideas. If these divisions do well, the people who worked on the project can expect big cash out bonus, equivalent of exiting a start-up company. I heard of one case where one division was given a bonus equivalent to 10 years pay, for making successful tablets.  So why wouldn’t you take the safe option? It makes sense right? People can be entrepreneurial within a big company and still earn a steady pay check from a secure job in a big company. Another possible reason for younger people to steer away from the more risky entrepreneurial path is Taiwan’s National Service policy whereby all men who are 18 must join the army for 2 years. This means that many men by the time they are 23-24 years old, don’t have professional work experience, leading them to play it safer and get a normal job.

But it seems there are signs of life in the start-up and tech scene in Taiwan. Wretch.cc, a Taiwanese blog community was acquired by Yahoo! in 2007. KKBox, a music streaming site is hugely popular and Facebook is quickly gaining traction. This has given rise to social media marketing services in Taiwan such as Mr.6 (previously covered). Atlastpost, founded by the Kuo brothers in 2007, originally a LBS blog service later transformed into a group buying site and consequentially acquired by Groupon for a rumoured US$1.5m to become Groupon Taiwan.

The investment environment is also picking up. appWorks Ventures, founded in 2009 is a internet and mobile application VC fund. Its business model is similar to Y-Combinator in the US and Innovation Works in China. Their purpose is to invest in Chinese Internet industry, to enhance Taiwan’s competitiveness internationally. Good on them! Entrepreneurs, especially in Taiwan so it seems, need this support and activity.

So despite the obvious challenges Taiwan faces in the start-up environment, namely the small market, it is developing. With more young people willing to experiment with ideas and investors willing to back the, Taiwan with its strong experience in technology will be an interesting country to watch over the next few years.

Please comment if you have any experience or opinions on being an entrepreneur or investor in Taiwan or have any insights into new exciting start-ups in Taiwan.


Jason Lim

Jason is an Australian born Chinese living in Beijing, specializing in entrepreneurship, start-ups and the investment eco-system in China, especially in the tech and social area.

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15 Comments

  1. As a startup in Taiwan, I completely agrees that military service and big stock option are the two major factors that the startup community is not so active in Taiwan.

    Another factor is that the software industry is not so big in Taiwan, unlike the IC design houses and hardware companies. The industry drives so many talent in this direction, when these people reach a point in life that they would like to go for a startup, they find themselves in a capital intensive industry for startups.

  2. I also agree that the national service is a factor but it’s been reduced to only 1-year now and I’ve heard they’re going to get rid of it in the future.

    I think you’re spot on when saying these large companies are sucking up all the talent.

    Most people when they graduate college have this desire for a steady paycheck. Mainly because it’s cultural (i.e. they need to help take care of their parents/family), but also socially they want to impress their peers by working for a name brand company.

    Most of the ‘startups’ that I’ve seen are often done by folks that didn’t go to top-tier colleges or even any college at all. But they mainly sell physical items like clothes, electronics, food, etc. or some type of service.

  3. For me, it’s something I’ve always wanted to do. Working on a startup is much more fulfilling than a tech job, “especially in Taiwan”. So many of my friends knows that but is just scared or unable to take this leap.

  4. Jeff, so what type of startup u launch in Taiwan? I might also plan to launch one too. Is it as complicated as china where you need an icp license? Do you need a company? Want to understand a little on Taiwan Internet market

  5. When you talk about startups, I think you are referring to internet & software startups. Taiwan’s tech culture is all about startups but in a different angle – mainly hardware. Silicon Valley’s start was with Fairchild and until the 90s focused on hardware. Arguably Taiwan’s Hsin Chu is the hardware sister of Silicon Valley. You have companies like Mediatek, MorningStar and blue chips like TSMC. These companies all started out small. Tech companies in Taiwan cater to the global market & because of their hardware roots they tend to focus on ICs & PC related products.

    1. Hi Tim, Yes I was referring more to internet and software type start-ups. Taiwan is well known for having very advanced hardware companies as you recognized.

  6. I work with the startup industry here in Taiwan and can safely say it is on the up. Yes, Taiwan is better known for its successful tech companies as you mentioned, but the Taiwanese internet industry is alive and well. The government is investing in this sector through programs such as the one I am currently involved in, as well as private projects like appworks. I think what is lacking in this market is exposure. For example, we host an annual event, IDEAS Show, where startups pitch their ideas and services to VCs, Angels and business leaders. It’s pretty cool. Check out our facebook page (www.facebook.com/IDEASshow) for more info. Taiwan certainly needs more coverage in tech blogs and other media platforms – so thanks!

  7. Thanks for the info James! What are some of the more interesting and promising start-ups you see emerging from Taiwan?

    1. No problem!

      Some of the companies are familiar models found in the West or China, the group buying, the ecommerce and so on. Others are quite unique and I’m unaware of any similar services in the US, Europe or elsewhere. We are seeing a lot of B2B services, online marketing, SaaS, cloud services, that kind of thing.

      In terms of consumer services, you could check out aircamel.com.tw or saja.com.tw – an online mall and an auction platform respectively. The former has the potential to revolutionize how sellers move their products across platforms and has done away with listing fees etc which the other players in this market charge. Saja is a ‘single, lowest bid’ platform – whoever bids the lowest single bid wins the product being auctioned. Someone won an iPhone 4 for US20c , for example.

      I’d be happy to put you in touch with some others, we’re always looking for media exposure. Perhaps we could continue this chat via email?

      Thanks again!

      1. Sounds good James. Please do put me in touch.

        Email me at jason.lim[at]technode.com

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