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Taiwan -- a growing market for startup companies

Taiwan -- a growing market for startup companies

staff writer

At a coffee shop in Taipei on a Friday evening, the air was buzzing with excitement as conversation flowed freely among some 40 people mostly in their 20s and 30s. Others kept streaming in.
Before long, people were invited to speak.
“I am looking for someone who knows how to build iOS applications, and is interested in developing educational apps for children,” said Wang Feng-cheng, founder of an Internet startup focusing on children’s education. “My partner and I will be sitting over there, come talk to us.”
Hardly a conversation you would expect at a social gathering, but this is not a usual get-together. It’s a monthly event aimed at encouraging young people to take risks and start their own Internet or technology companies.
Such events have become popular in Taipei in recent years as interest in creating something unique grows among the young high-tech oriented community here. And there are signs that the city’s support network for startups is also gradually building up.
It is estimated that Taiwan has some 2,000 Internet startups, up from just a handful a few years ago, according to the government-funded Institute for Information Industry’s Innovative DigiTech-Enabled Applications and Services Institute (IDEAS).
The rapid growth in Internet startups is no surprise, considering entrepreneurship is ingrained in Taiwan’s DNA. The backbone of the country’s economy has long lied in small to medium-sized enterprises.
Some of the Internet startups work on building a virtual currency exchange center which enables users to exchange credits from different online venues; others aim to create the ultimate online menu that gathers all the restaurant menus in Taiwan; while still others help the undecided make up their mind about anything, by inducing online users to make the final selection for them.
For many fresh college graduates in Taiwan, working in big companies, and steadily climbing up the corporate ladder has long been considered the way to go. But an increasing number of people are turning away from this typical career path.
They believe the future lies not in being stuck in one’s cubicles for years, but in building a million-dollar business and becoming the next Mark Zuckerberg, the founder of Facebook, before turning 30.
“Joining a startup offers one a broader view than working at big companies and doing specific tasks. A successful startup offers one a fast track to greater wealth,” said Jamie C. Lin, the host of the cafe get-together and one of the masterminds behind Taipei’s budding startup support network.
Lin co-founded appWorks Ventures, a company that help brew Internet startup companies.
He and three other co-founders provide counseling services, free office space, mentoring by successful entrepreneurs, and networking opportunities with venture capitalists (VCs). In return, it gets first chance to acquire small stakes in the companies.
“At the end of the day, it’s all about the community,” Lin said, when speaking about the purpose of a startup mixer.
As the road to entrepreneurship can be a lonely path, startups need to meet up frequently to exchange ideas and push one another along, said Lin.
The year-old program has turned out three batches of startup entrepreneurs. The third batch has just recently graduated from the program in October after presenting their projects in front of more than 700 entrepreneurs, electronics heavyweights, and VCs.
All of them have started their companies during the program and some have earned major sponsorships from investors following their presentations.
“Trends, ideas and startups come and go. But it’s the people that continue to work on new things and challenge the status quo that matters,” Lin said. Obstacles Ahead
But those who become entrepreneurs say they face many obstacles.
Paul Kuo, a clergy-turned-entrepreneur who started a company that turned complex stock market information into graphs, told CNA that not enough government resources have been put into the software sector.
And where government funding for early-stage companies does exist, its lengthy application process deters startups from applying, he said.
Kuo said he tried to apply for the Ministry of Economic Affairs’ Small Business Innovation Research (SBIR) program, which has NT$900 million (US$30 million) in subsidies for small and medium-sized enterprises this year. But the massive amount of paper work was overwhelming for his small, understaffed firm, Kuo said.
To be approved, each project has to go through multiple stages of scrutiny.
Even Chung, CEO of Xinosys Co., one of the winners of the 2011 Asia Red Herring Award that honors innovative tech companies, was an applicant to the SBIR program.
Much to his disappointment, a panel of judges seemed out of touch with reality.
“They said my company should tackle bigger problems,” he said. “(But) the ‘small’ problems I am dealing with are already full of challenges,” Chung said.
Lin agreed and even called the government’s funding programs “poisonous.”
“Startup companies need to constantly change direction to adjust to the needs of their users. The government’s set-a-goal-then-execute-it style of funding programs contradicts the logic of entrepreneurship,” Lin said.
It basically means changing tracks in between is not possible, even when one realizes the idea simply does not work, he said.
“The result is a startup that successfully executes a bad plan,” he stressed.
Chang Ming-huan, a specialist at the ministry, said the SBIR program’s rigorous evaluation process ensures taxpayers’ money is well spent.
Learning from the Silicon Valley

Some startups suggested Taiwan’s government should learn from the White House’s Startup America initiative -- which commits US$2 billion of subsidies to small, early-stage companies.

The U.S. government is also tweaking its immigration law to entice startups around the world to base their headquarters in the U.S. and create jobs for Americans.

But Taiwan’s startup environment is not established yet, Chung said, noting that software engineers here are trained to look for steady jobs whereas those in the Silicon Valley often jump at the chance to work at successful startups.

“When a young college graduate faces many career choices, and you do not offer him many incentives to work at your company, he’s not going to say yes,” Chung said.

Mandatory military service poses a hurdle

One of the biggest factors drawing college grads to big companies is the ability to opt-out of Taiwan’s mandatory military service.

Corporations can provide three-year paid employment for male applicants with specialty skills, which exempts them from the full-year military service.

Startups can’t offer such incentives because regulations stipulate that each company can only hire one-third of its R&D talent through the program -- that translates to only one employee at a startup company, as most startups consist of no more than four people.

The military service also zaps the creativity out of college graduates, startups said.

“The country spends four to six years in training a software engineer (in college) and then as soon as he graduates, he is sent to the military to learn how to obey orders,” said Lin. “Software developments require the ability to think outside the box. But the military is teaching the complete opposite.”

Hopeful signs abound

Despite the challenges, incubator programs such as the one offered at appWorks Ventures and many similar ones at local universities are signs that Taipei’s startup environment is gradually improving.

Other signs that the city’s startup movement is picking up momentum include more competitions to come up with the best mobile applications and the Taipei City government offering subsidies for startups.

A Japan-based startup support company’s opening of a Taipei branch recently was also further proof that local environment is good enough to attract overseas investors.

Despite the encouraging signs, the worst enemy an entrepreneur faces on the lonely road to building a startup is perhaps himself.

As Paul Kuo, the clergy-turned-entrepreneur, put it: “When a person is deprived of a stable income, his personality and image will be altered and destroyed to some extent. Only the strong can keep moving forward.” By Ann Chen, CNA Staff Writer ENDITEM/cs

Updated : 2021-10-27 21:50 GMT+08:00