2020 TAIWANSTARTUP INVESTMENT SCENEREPORT
Latest Trends of Early Stage Startup Investments in Taiwan

Content

01

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Editor’s Note

P.02

02/

Introduction

P.03

03/

Taiwan’s Venture Capital Markets

P.05

04/

Trends in The Taiwan Startup Investment Scene

P.09

05/

Taiwan’s Top Startup Industries

P.13

06/

Who Are The Investors?

P.15

07/

Summary

P.17

08/

Acknowledgments

P.19

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Editor’s Note
This report was originally written by the FINDIT team of the Taiwan Institute of Economic
Research (TIER), then edited into an English version by Taiwan Startup Stadium (TSS), in
hopes of shedding light on the latest trends of the Taiwan investment scene. FINDIT’s mission
is to integrate and provide valuable information related to innovative entrepreneurship andmarket, such as early-stage investment market dynamics, perspectives on the startup ecosystem, and latest ideas on technologies and media.
Founded in 2015 and funded by Taiwan’s National Development Council (NDC), TSS’ main
mission is to help Taiwanese startups grow and scale to world-class tech businesses bybridging innovation thought leaders, potential investors, and other resources necessary to
become successful. We serve startups through a free membership program called “Starting
Lineup X (SLX)”, offering educational content and workshops, investor and mentor matchmaking, and many more resources that help startups grow. Currently, TSS has 220+ startup
members across different industry verticals.
The purpose of this report is to share the data and findings on Taiwan’s startup investment
scene. We will be covering investment trends happening in Taiwan for the past few years
along with some analysis and comments, followed by further data collected from our internal
SLX database. We hope that after reading this report, you will gain more interest in the latest
trends and deals happening in Taiwan.

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Introduction
Both access to early stage funding as well as information regarding venture capital
markets are important for a robust startup ecosystem. Taiwan’s startup investment
scene has always lacked a transparent and aggregate information database. The
FINDIT research team has analyzed publicly-recorded companies in Taiwan from 2015
to Q2 of 2020, aiming to establish a more thorough picture of the early stage investment
market.

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In the past few years, the Taiwanese government has been actively investing numerous resources into building and establishinga robust startup ecosystem while also
trying to create a stable and prosperous
venture capital market to increase incentive
for startup founders and investors. In otherwords, venture capital plays a key role innurturing entrepreneurship and new
ventures. For investors, it is a necessity tounderstand and track shifts in the capital
market and ever-changing industry trends
to scope out new potential investment
targets. For startup founders, receiving
external investment is a necessity to growing; it is important for founders to know theinnovative trends and the characteristics ofstartups that are receiving funds. All in all, arobust venture capital (VC) market is necessary to spur entrepreneurial growth andcreate a stable startup ecosystem.
Recently, with more programs connecting
the startup communities in Taiwan, enthusiasm and energy have been pouring into thestartup ecosystem. We are seeing an
increase in the number of startups entering
the market and more interest from inves-tors. With the help from government resources and startup community builders, moretalented and innovative startups have been
nurtured, spurring investments within themarket. Though check sizes have been relatively small compared to markets like that of
the United States of America, the number ofdeals have increased tremendously throughout the years. These startups with international competitiveness have not only
become hot commodities between domestic investors, but also are attracting interest
from overseas.
Due to the outbreak of COVID-19, investments and deals have slowed down. Comparing the first half of 2019 and 2020, thenumber of deals and amounts havedecreased by 20% and 1.7% respectively.
Facing sudden challenges one after anotherhas become a normal practice for startups
to grow. However, Taiwan has remained
lucky enough to keep COVID-19 at bay, withbusinesses and startup communities slowly
but steadily pushing forward. As a result, weare excited to expect more deals happeningin Taiwan in the near future.

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Taiwan’s
Venture CapitalMarkets
Between 2015 and Q2 of 2020, there are 1,589 early stage investment deals in Taiwan
totaling over US $4.4 Billion, in which 1,164 deals were involved with startups founded
after 2010.
During 2018, 207 deals that totaled up to an amount of US $685 Million were completed
in Taiwan. In the following year of 2019, the number of deals increased by 65.2% to 342
deals while the total amount decreased by 2.3% to US $669 Million.
Affected by the COVID-19 pandemic this year, deals from January to July decreased to 93
with a total amount of US $231 Million; this number is equivalent to a third of the amountlast year. It is estimated that new ventures in 2020 may not reach the extent of 2019.
According to the NDC, Appier and Gogoro have grown to become Taiwan’s first two
unicorn startups in 2019 .

05

Over the past 5 years, the FINDIT team of the Taiwan Institute of Economic
Research (TIER) has been researching and investigating Taiwan’s venture
capital markets. After analyzing and cross-referencing data fromearly-stage startup investment databases, major media reports, publiccompanies’ quarterly financial reports, press releases published by startups, investment organizations, and government investment reports,
FINDIT has uncovered some interesting data regarding the early stage capital markets of Taiwan. The FINDIT research team has analyzed data from2015 to Q2 of 2020, aiming to establish a more thorough picture of theearly stage venture capital market.

Total Amount of Deals

Total Amount of US $Total Amount of Deals fromstartups founded after 2010

Total Amount of US $ invested instartups founded after 2010

73%
1,164 Deals

1,589 Deals in Total

72%
US $3.2 Billion

US $4.4 Billion in Total

From 2015 to Q2 of 2020, there have been 1,589 early stage investment deals
totaling up to US $4.4 Billion. Of the 1,589 deals, 1,164 are deals where thestartup was incorporated after 2010. These 1,164 deals totaled US $3.2 Billion.

06

In 2015, there were 140 startup investment deals in Taiwan totaling US $391 Million.
Since then, Taiwan has seen a steady growth rate in the amount of capital invested
in early stage startups. In fact, by 2019, there were 342 startup investments deals
totaling US $669 million, showing an annual growth rate of 65.2%! However, thisyear, the amount of investments have dipped to US $231 million due to COVID-19’s
hard hit on the market. Also, the large spike in 2017 can be attributed to Gogoro
receiving US $300 Million of investment. If we exclude this large Gogoro deal from2017, the total annual growth rate from 2017 to 2018 would be 7.2%.

Amount of Deals

US$ Million

400

1,000
342

320

800

240
189
160

193

600

207

140

93

80

0

200
391

439

778

685

669

2015

2016

2017

2018

2019

231
2020

Jan - Aug

Total Amount of Deals
US$ Million

The total number of deals and the total amount of money
invested in startups per year.
Note: 2020 only covers January to August.

07

400

0

According to the 2019 Global VC Report by Crunchbase . Compared with the global market, the amount of early-stage startup
investments (both the total amount of money invested as well as
the number of investment deals) in Taiwan is roughly around theglobal average. According to the 2019 MoneyTree Report by PwC
and CB Insights , the total number of VC investments globe wide
was 15,920, an 11.74% increase compared to 2018. However, theseinvestments amount to a total of US $111.9 Billion, a 85% dropcompared to 2018.
One special aspect about Taiwan's startup ecosystem is government involvement. Growth in recent years can be attributed to
Taiwanese government’s investment in the startup ecosystem. In
fact, in 2017, the NDC started a program through the National
Development Fund (NDF), called the Business Angel Investment
Program . Through this program, NDF aims to establish a soundstartup investment mechanism to improve the angel investment
environment in Taiwan. Through co-investments in startups alongside angel investors, this 5-year program has already allocated anamount up to $2 billion NTD, and has made over 130+ startup
investments since the program began. Between Q4 of 2014 and Q1of 2019, the Business Angel Investment Program already comprises 16% of all early-stage startup deals.

08

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Trends In The
Taiwan Startup
Investment Scene
Looking from an investor’s perspective, high risk, high reward, and high technologicalbarriers are still the most attractive when looking to invest in Taiwanese startups.
Looking from a startup's perspective, the economics of starting and running a businessin Taiwan is lower compared to that of other countries. Investments can typically last a
lot longer and give Taiwanese startups enough runway to get to the next milestone. From
another standpoint, one of the main reasons why the average scale of deals in Taiwan islower than the international average is that most businesses in Taiwan still aim at thedomestic market as their target market.

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When it comes to investment scales in Taiwan, most investments are under US $1
million, followed by investments between US $1 to 2 million. Although there are stilltransactions above US $10 million in Taiwan, most of the investment deals are still
relatively small compared to the West. According to the Crunchbase 2019 Global
VC Report, the global average seed/angel round size in 2019 was US $1.4 million,
with seed/angel round investment deals accounting for 55% of the total startup
investments. The global average for Series A investments was US $15.9 million,
accounting for 28% of the total investment deals.
In Taiwan, deals are significantly smaller, but it is also important to keep in mind thatthe economics of starting and running a business in Taiwan is lower compared tothat of other countries. Management fees like paychecks, office rental are relatively
cheap. US $1 Million is more than enough for an average business in Taiwan to sustain itself, and this amount can usually last long enough for Taiwanese startups toget to the next milestone. All that being said, we are seeing investment deals above
US $10 million steadily growing year over year with Gogoro and Appier being
announced by the NDC as Taiwan’s first two unicorn startups.

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49%

17%

50%

15%

9%

9%

9%

4% 4%

4%

9%

5% 5%

8%

7%

8%

6% 2%

10%

5%

8%

2015
5%

8%

8%

2016
51%

19%

6%

6%

2017
44%

15%

9%

10%

6%

2018
54%

15%

7%

7%

2019
62%

6%

8%

3%

8%

2020

Under US $1 Million

US $1-2 Million

US $2-3 Million

US $5-10 Million

Above US $10 Million

Non-disclosure

US $3-5 Million

Percentage breakdown of deals happened in Taiwan by funding amountfrom 2015 to 2020 Q2.

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4.39
US $4 Million

US $3 Million

3.61
2.92

2.68

2.55
2.17

US $2 Million

US $1 Million

1.00

0.95

1.00

1.09

0.83
0.50

2015

2016

2017

Average US$ Million

2018

2019

2020

Jan - AugMedian US$ Million

Average and median amount of US$ within deals happened in Taiwan from 2015 to 2020 Q2.

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Taiwan’s Top
Startup Industries

05/

Taiwan’s top industries in terms of VC funding
received are the healthcare and medical industries.
Both of the industries range top in terms of the total
amount of money invested and the total number ofinvestment deals. Since 2015, there are 239 cases
totaling US $828 Million being invested in biotechnology, pharmaceuticals, and medical devices. Asidefrom healthcare, startups that produce electronic
components like IC design or communication components also appeal to investors, coming up to 118
cases totaling an amount of US $295 Million since2015. Startups that provide software/hardware B2B
services like AI integration services, cloud services,or data analysis have also attracted a fair amount of
VC funds, totaling up to 99 cases with US $281
Million since 2015.
If we look from the scalability standpoint, green
energy and IoT startups have scaled tremendously.
Green energy startups landed top 3 in 2020’s investment cases, with battery energy storage and solar
photovoltaic energy being the major focuses.
Investment deals and amount have both increased
for IoT startups. For example, indoor positioning
systems, surveillance systems, energy management
systems, industrial applications, and robots havereceived decent amounts of interests from VCs.

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DealsAmount

Health Tech

Health Tech
239

Eletronics$828M
Auto Tech

118

$356M

Enterprise Service

Media & Entertainment

99

$305M
Eletronics

IoT
82
Media & Entertainment$295M
Enterprise Service

78

$281M

The top startup industries in terms of total number of investment deals closed andtotal funding amount from 2015 to August of 2020.

Health Tech

B2B

Taiwan's Health Tech ranked #1 in both theamount of total dollars invested and thenumber of total investment deals for a few
years already. According to the Numbeo
Health Care Index By Country 2020 ,Taiwan ranks number 1 in the world in
health care and health care experience.
The healthcare system, titled National
Health Insurance (NHI), was instituted in
1995 with the population coverage reaching 99% by 2005. Furthermore, Taiwan
implemented a national electronic healthrecord system in 2009 . With comprehensive NHI and health records of the population, and with Taiwan entering an aging
society (14.05% of its population are over
65 years old) in 2018, startups have strong
incentives to build healthcare and medical
solutions because there is already awell-established market to sell to.

B2B startups (both software and hardware) also rank quite high in terms of theamount of total dollars invested and thenumber of total investment deals. This canbe attributed to the fact that Taiwan is acountry with strong manufacturing andintegrated circuit (IC) designing background. The hardware supply chains in
Taiwan are also well-organized. In fact, alarge amount of the daily used smartphonecomponents and electrical vehicle particles worldwide are manufactured in
Taiwan or by a Taiwanese corporation.
Corporate Venture Capital (CVC) investments comprise 59% of all startup deals in
Taiwan, as corporates are constantly looking for strategic investments. It’s quite
common for business units in Taiwanese
corporates to spinoff and develop products and solutions specific to their parent
company.

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Who AreThe Investors?
The percentage of local companies or CVCs that engage in startup investment is quite high,landing at around 59% of total startup investment deals; VCs come in second at around 43%.
The Taiwanese government is also quite active in startup investments, with the National
Development Fund (NDF) already investing in around 16% of total startup investments.

Corporate
Venture Capital

59%
673 Deals

Local
Venture Capital

43%
499 Deals

NationDevelopment Fund16%
188 Deals

Overseas
Venture Capital

15%
177 Deals

This graph indicates the composition of investors (CVCs, VCs, Government, Overseas investors)in Taiwan, average percentage of each type of investors, and the number of deals completed byeach type of investors from 2015 to Q2 of 2020.
Note that most investments involve multiple companies, VC’s, or investors, so the total percentage
is over 100%.

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70%

62.86%

61.90%

60%

58.55%

58.45%

41.45%

43.00%

52.63%

50%

50.79%

40%

40.71%

30%

22.22%

20%
10%

15.71%

15.34%

11.43%

15.23%

2015

2016

0%

Corporate
Venture Capital

Local
Venture Capital

45.32%
24.27%

16.06%
14.49%

11.99%

2018

2019

6.22%
2017

Overseas
Venture Capital

NationDevelopment FundThis graph breaks down the composition of investors (CVCs, VCs, Government, Overseas investors) from 2015 to 2019, and the percentage of deals
completed by each type of investors.

Taiwanese corporates are quite active in the early stage startup investment scene, having
invested in 59% of all startup deals from 2015 to 2020. This perhaps is a reason as to why
there is a lack of transparency in the venture capital markets in Taiwan — corporates are
strategically investing and typically do not disclose their investments to the public.
As mentioned, the NDC started the Business Angel Investment Program through the NDF
with the goal to establish a sound startup investment mechanism in Taiwan. This 5-year
program has already made 188 startup investments since the program began. Between
Q4 of 2014 and Q1 of 2020, the Business Angel Investment program already comprises
16% of all early-stage startup deals. The growth of startup funding in Taiwan can definitely be attributed to this program, as it has become one of Taiwan’s biggest investment
programs.

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Summary
With programs like the NDF and numerous other initiatives to boost startup growth,
the Taiwanese government has offered tremendous help and resources to thestartups. In recent years, we’ve started to see more and more new startups attracting the attention of both local and foreign investors. Though startup investment
cases have been consistently growing in the past few years, the average scale ofthese transactions are still relatively small compared to the global average. With
that being said, high risk, high reward, and high technological barriers are still themost attractive to investors looking to invest in Taiwanese teams, such as biotech
or medical startups.
Another important thing for Taiwanese startups to do is to combine their technologies with existing mature manufacturing industries in Taiwan. Main reasons beingthat more than 50% of investments happening in Taiwan are with CVCs and that
B2B startups receive the most funding. Their businesses are not to challenge or
disrupt the existing industry, but to solve a specific pain point for corporations.
Though these kinds of startups might not always be in the spotlight or make headlines, they are vital and a key to the early stage investment market of Taiwan.

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07/

In recent years we have seen much corporate involvement in the
Taiwan startup investment scene. More than half of Taiwan's earlystage investments are strategic investments involving corporates,
as mergers and acquisitions (M&As) are more likely the exit strategy for startups in Taiwan. This is why corporates are getting moreaggressive in working with startups. In fact, many corporates haveworked with us to build innovation. They no longer want to just do
pitch sessions or single workshops, but want to actually work withand build relationships with startups. We touched on more of this
topic, from corporate innovation methods to successful cases like
Audi Taiwan and Acer, in our 2020 Corporate Innovation Report .
It is clear that corporate innovation has become a trend in Taiwan.
All in all, we are very excited and proud of what Taiwan startups
have accomplished in the past few years. Though 2020 is a toughtime for the world wide capital market, we are thankful that the
Taiwanese government has done a great job stopping COVID-19
from spreading domestically while supporting startups and businesses nationwide. With that being said, we are looking forward to
new opportunities that came along with COVID-19, such as digitaltransformation. FINDIT’s report has shed light on the early stage
investment scene and results have shown that we are on a growing trajectory with the government as one of the main drivers.

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Acknowledgements

Taiwan Institute of Economic ResearchTaiwan Institute of Economic Research (TIER) was established on September 1, 1976 by Dr. Chen-Fu Koo as thefirst private independent think tank in Taiwan. The main
purpose of the institute is to actively engage in researchon domestic and foreign macroeconomics and industrial
economics in order to provide consultations to the government and enterprises and to promote Taiwan’s economic development.

Taiwan Institute of Economic Research
FINDIT’s mission is to integrate and provide valuable
information related to innovative entrepreneurship andmarket, such as early-stage investment market dynamics, perspectives on the startup ecosystem, and latest
ideas of technologies and media.

Taiwan Institute of Economic ResearchTaiwan Startup Stadium (TSS) is the leading startup ecosystem builder in Taiwan with a mission to help Taiwanese startups grow and scale to world-class tech businesses. TSS currently serves 220+ startups by connecting startups with their vast network of mentors and investors, coaching startups to go global through various educational workshops and community events, and providing tons of perks from corporate partners. With tailoredresources at every stage of their growth, TSS startups areready to scale and go global!

Startup Island TAIWAN
Startup Island TAIWAN is the national startup brand of
Taiwan. The brand symbolizes a journey from a startup
island to the international arena. It demonstrates to theworld the strong ambition and capabilities of Taiwan
startup companies as well as their intention and ability tocontribute to other startup ecosystems around the world.
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