Key Takeaways
1.Startups in Taiwan are uniquely positioned to composite a startup hub in the coming years. Favorable market conditions, government support, and proximity to key markets put startups in Taiwan in a good position to succeed.
2. The Taiwan economy, which was based mostly around manufacturing in the past is moving toward the so-called “New Economy” of Taiwan, focused on digital services (“SaaS”), many of which are B2B companies solving specific pain points of the “Old Economy”.
3. QIC (one of Taiwan’s oldest consulting firms) has predicted huge growth in the New Economy in the next 10 years– predicting over 100 unicorn companies by 2031, with approximately 10% of them estimated to be valued at over USD $10bn.
4. For companies wanting to work with startups in Taiwan, a PEO might be a good option to get started. A PEO can help you hire local nationals with virtually no time spent and with very little employment risk.
Keeping up with their western counterparts like Silicon Valley, many Asia-Pacific countries have been slowly emerging as global startup hubs. One of these emerging startup hubs is Taiwan, which is making considerable efforts to become more startup-friendly.
In this article, we’ll talk about startups in Taiwan and how the country is becoming a favorite place to start a new venture for global entities.
An Overview of Taiwan’s Startup Ecosystem
With a population of 23.8 million people, Taiwan has continued to be one of the manufacturing powerhouses in the world. For the past four decades, the country has taken a more lenient and dynamic approach to supporting the startup sector. There has been a change in consumer habits and preferences, who now look for more options for their purchases.
Software startups in Taiwan are also enjoying an attractive customer base. New-age customers are more willing to accept their products and services. The internet speeds in Taiwan, Intellectual Property Protection, and cultural familiarities with many other APAC countries also favor the country to be the launchpad for many global startups.
In recent years, there has also been an increase in venture capital investment, government initiatives, and sectoral reforms in Taiwan. These changes have reinvigorated innovation and led to more global entrepreneurs setting up their base in the country. Taiwan has also recognized the essential roles startups play in bolstering economic growth. The country has thus made numerous changes in its startup ecosystem to be more approachable.
Key Growth Factors for Startups in Taiwan
Let’s have a look at the factors that support the growth of startups in Taiwan and why new global aspirants can choose Taiwan as their hub:
Favorable Market Conditions
With high smart device penetration and more people realizing the importance of technology, startups are finding a large market base to serve globally. The situation is the same in Taiwan, where more than 87.9 percent of citizens have internet connectivity. Also, 92 percent have mobile phones, 67 percent have a desktop/notebook, and 29 percent have tablet PCs.
Being a centrally located country in Asia, Taiwan also enjoys geographical advantages. Its location allows it to form collaborations and associations with Western countries as well as many developed and developing economies in Asia.
During the Covid-19 pandemic, the Taiwan local government was able to keep the virus mostly at bay; while their economy did see shrinkage (as expected), the impact on Taiwan was less harsh compared to countries ravaged by the virus.
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Support from the Government to Startups in Taiwan
The government of Taiwan is also catching up to the rise in numbers and demand for startups. The government has introduced several initiatives to support the entrepreneurial spirit and technological innovation. New ideas, startups, and small businesses are more openly accepted, especially in the technology sector. For instance, the National Development Council (NDC) launched the Startup Regulatory Adjustment Platform in October 2017.
Numerous changes also focus to attract international entrepreneurs to Taiwan such as ease of starting a business. It also includes an entrepreneurial visa that allows individuals to set up their startups in Taiwan without a large sum of investment.
Additionally, the NDC established the Taiwan Startup Stadium in 2015 to foster more local entrepreneurs and businesses, and allow them to exhibit their achievements. Taiwan Startup Stadium (TSS) has served more than 200 startups. It has also connected them with more than 120 mentors, 500 investors & 30 corporations.
AI and IoT Development in Taiwan
Hubs for Artificial Intelligence (AI) and the Internet of Things (IoT) are also promoted by the Taiwanese government. The main focus behind this is to have more open and transparent data. In 2013, the National Development Council also established the Government Open Data Platform. It is an open database of information on numerous services in open formats for free public use. These datasets allow more AI and IoT startups in Taiwan to create new applications more efficiently and accurately.
In 2017, Taiwania Capital was founded, which is Taiwan’s first venture-capital firm which is backed by the state. Taiwania Capital’s Fund I closed USD 150 million in funds for startups that focus on cloud computing, enterprise software, autonomous systems, AI, IoT, robotics & drones, information security, next-gen semiconductors, and sensors.
Industry 4.0
Industry 4.0 in Taiwan has come as a shift from the manufacturing industry to the technology sector. This has led to a shift toward cloud computing, Big Data, IoT, and smart robots. Taiwan has also reinforced its IPR laws, putting it before China and Japan in terms of protection and costs respectively.
Taiwan is ranked as world number 4 in innovation capability as per the World Economic Forum in 2019. The Asian island is also focusing on technology to transform itself and convert into a hub for international entrepreneurs who look for advanced manufacturing services.
Video: Why International Investors are Focusing on Startups in Taiwan
Skilled Talent
Taiwan also hosts a large workforce of well-qualified and technologically skilled individuals. The wages in fields like technology are also lower as compared to China or Japan due to the country being an emerging hub. Many individuals in Taiwan are also multi-lingual, allowing overseas entities to easily hire their remote workforce in the country.
More Welcoming Conditions for International Players
Options like Entrepreneur Visa and an Employment Gold Card are attracting more international entrepreneurs to set up their startups in Taiwan. The National Immigration Agency may also grant permanent residency to foreign entities applying for investment immigration to Taiwan. This is permitted for entities who have invested more than NTD 15,000,000 in a for-profit enterprise and created five or more job opportunities for ROC nationals for over 3 years.
Future of Startups in Taiwan
Startups in Taiwan are on a continuous growth spurt. Despite facing numerous challenges in the past, the startup sector in the country has been successful in attracting venture capital firms and global interest in recent years. Technology and electronics startups are on the rise in the country.
With more government support and backing by several innovation-supportive laws, Taiwan is on the path to becoming a new startup hub in Asia. Some companies, including one of Taiwan’s oldest consulting firms QIC, predict that Taiwan will have over 100 “unicorns” (companies with a market capitalization of USD 1bn or more), with 10 of them being companies with a market capitalization of USD $10bn.
How PEOs Help Startups
International PEOs like Horizons assist startups by acting as their employment partners. We can provide you with the right market knowledge to set up your business in Taiwan. We support all your employment needs while you leverage the business opportunities and a vast pool of talent.
Horizons also helps you to determine the market demands and hiring requirements to establish your base in Taiwan. You can connect with experienced local professionals and workforce in the country, and help you with your Taiwan recruitments, payroll management, etc. You can find end-to-end support for compliance with Taiwanese laws, HR norms, and tax regulations.
Our experts will help you with all the local requirements associated with launching a business. Contact us today to find the right growth opportunities for startups in Taiwan.
Frequently asked questions
There are a number of factors that make startups in Taiwan attractive for investors. These include:
- Favorable market conditions
- Support from the government
- AI and IoT development
- Industry 4.0
- Skilled talent
- Welcoming conditions for international players
- Powerful established industries reinvesting into startups
With a population of over 23m people, Taiwan has a relatively small, but vibrant startup scene.
Rather than looking at number of startups, it might be more helpful to understand how venture capital markets are treating startups in Taiwan.
According to the Taiwan Institute of Economic Research (TIER), from 2015 – 2020, there were almost 1,600 successful VC deals with startups in Taiwan, with 73% of the companies started after 2010. Their research indicates a robust startup scene in Taiwan, supported by the government, that local and foreign companies are confident in.
As TIER continues to collect data, we may see the trend of “quality versus quantity” continue over the next 5 – 10 years.
