TAIPEI (Taiwan News) — At Meet Taipei, Taiwan News sat down with the co-founder and managing partner at SparkLabs Taipei, Edgar Chiu (邱彥錡), for an extensive and exclusive interview.
This is part of a multipart series on the startup scene. The first part is "Insights on the startup space with Meet Taipei's Kyle Chen," the second is "Accelerating success: SparkLabs Taipei’s Edgar Chiu," and the third is "Is Taiwan a good place for investing in businesses?"
Taking a startup from a seedling to a huge success doesn’t happen by accident; it’s a process, and one that can be learned. Edgar Chiu does this professionally in his role as head of SparkLabs Taipei.
As the COO of a company that got bought out by South Korean giant Naver, he has seen two of their over 40 investments succeed in just four years — one by IPO, the other by buy-out.
Two previous articles looked at SparkLabs itself and the advantages and disadvantages of Taiwan for business investing. In this final piece, Chiu shares with Taiwan News his insights on how startups can grow and go global.
The core starting point is to identify a problem, then provide a solution. Chiu explains this in a Taiwan context:
“There is a lot of original innovation in Taiwan. The challenges are how those innovations can meet specific problems that big companies or people are facing. I think this kind of problem-solving is mentality versus (specific client) product treatment," Chiu says.
"I mean who needs this product? I think the Taiwan mentality is more like the second one, instead of the first one. The first one is to discover problems, and then we decide what kind of product can fulfill it."
Chiu is pointing out that traditionally Taiwanese have focused on manufacturing, and are world-class at solving specific problems on spec for individual clients. The problem is that this isn’t where the big opportunities are.
Solving problems that apply to many people or multiple clients is where global growth lies. Crucial for success is identifying those solutions.
Chiu is always on the lookout for problems to solve, whether it is for corporate clients or large numbers of individuals. As Chiu notes, “Now, most Taiwanese companies will hesitate because they don’t know what kind of problems have got the potential to grow."
"Start to do digital transformation and get inquiries, and we can say, ‘Hey, there is a huge opportunity over there.’ Companies aren’t even aware there is an opportunity," Chiu says.
"On the reverse side, instead of taking startups to go out, the other way around, we actually collect the problems that companies are now facing. Especially from multinational companies.”
Over-reliance on a few clients is a problem that must be addressed from the beginning. Chiu explains the problem: “Companies need to make sure that other companies can’t bypass you. I always tell startup companies that you can work with the major players like Apple or Google, but the risk is if they provide similar services as your company.”
"So what can you do? Don’t stick on one certain channel or company. Also, try to do portfolio management to avoid risk. How to do it is something we coach companies on.”
But how do you know if your solution to the problem is the right one? Chiu addresses this challenge: “You are already solving a problem that’s a global problem. So, in defining the problem, feedback is so important.
"Your users inside of Taiwan or outside of Taiwan, how do you receive that feedback from outside of Taiwan? So, we help the company review all the user logs and see how the users react to your business, whether you have a good market fit already, or is it a time to test new business models?
"So, for early-stage startups they’ve got this bandwidth and these opportunities to have this type of trial-and-error to figure how is the best way to do this. So that is step one.
"But most of the founders, they are trying to grow the business without reviewing the user feedback. So that I think is the most fundamental and the biggest part in how we help the company. Once you have the perfect market fit, that is the time you can grow.”
Chiu notes that Taiwan has a challenge but also opportunity on the world stage: “All the brands, all the value-added services, are grabbed by overseas companies like Apple and Microsoft, but there is a lot of groundwork that is fundamental that is built by Taiwanese.
"So, how can Taiwan really step up to become the companies that get the client-facing front-end data from all its users? That’s the thing right now we need to think of. Taiwan will have to work for itself or work for others. By definition, we need to find our way out.”
Another problem that needs addressing early on is making sure the company is in a position to accept funding. Chiu explains it this way: “This kind of know-how, a lot of startup founders didn’t get a chance to learn about it, so this is how we coach most of our companies, how to sell the company correctly. Should it be a Taiwan company or a holding company for offshore selling?
"Actually, there is a lead time for doing that. But if you want to be an investor and invest in your company, but your company is not set-up ready, with this kind of institutional money, the opportunity will be lost. That is one of the roles we play, to bridge those sources of international money — global capital — to match to Taiwanese startups.”
With all of these pieces in place, it’s time to get out and "hustle." This is how Chiu characterizes that process and the challenges that come with it:
“And then it comes to go-to-market strategies. How do you use one-liners? How do you pitch correctly to let the users and investors know about your business within seconds? That is one of the challenging parts for Asians.
"They are talking using buzzwords, but not using one-liners to let investors know about your value and attraction. So the go-to-market strategy is about the PR, marketing and also business development. How do you cold call or pitch or by referral get a chance to connect with the tier-one multinational companies for local companies to do business?"
Then comes fundraising, Chiu continues. "How do you prepare a better pitch deck to pitch within six minutes or 10 minutes to the investor? How do you showcase your product using a not very long deck, but by pitches, so the investor can get the ideas and also get how you are within maybe 30 minutes or so."
"So, all of these, in aggregate, will get the result. They need to be more precise. Over 80% got investments from outside of Taiwan. That’s the result.”
Chiu and his team aren’t passive in the fundraising process, however: “The reason why most of our companies got funded by international capital or those type of VCs with international experience in Taiwan, the main reason is that they are doing global business. For the early stage, strategic investors matter.”
Does this all sound like hard work? It is, but Chiu gets considerable satisfaction from it: “I quite enjoy the problem-solving process. When you are the bridge to match these opportunities, they are all happy, and we are happy because we are the investor in these startups.
"So I think by creating this sort of win-win situation, that is the most effective way to elevate the whole ecosystem to the next level,” Chiu concludes.