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Taiwan hopes to use tech gurus as `business angels'

Taiwan should look to foreign countries and push forward the establishment of the so-called "angel clubs" to help finance high-tech start-ups, analysts and market watchers suggested yesterday at a seminar.

An angel club refers to a group of individual investors, or "business angels," created for the purpose of promoting personal investment in technology-intensive companies at an early stage of development.

"Angel clubs composed of retired high-tech professionals will be capable of identifying promising ventures and raising seed money to incubate their development," said Yang Ya-hwei (楊雅惠), a research fellow at the Chunghwa Institution for Economic Research (CIER, 中經院).

At a seminar yesterday to discuss the appraisal of high-tech companies' intangible assets such as business ideas, management expertise and technological advantages, Yang said high-tech startups usually have difficulties in securing loans from local banks.

"Local banks, for fear of default risks, are reluctant to grant loans to high-tech startups, whose technological assets at an early stage usually cannot be collaterized to secure loans," she said.

As for well-developed high-tech companies, they have no problem raising capital either indirectly through bank loans or directly from capital markets such as the stock and bond markets, where high-tech companies account for 77 percent to 92 percent of all listed firms last year, she added.

But with backers who possess special expertise and public credibility, high-tech startups are sure to secure capital and know-how for development, said an industry watcher yesterday.

"Those retired individuals are not just a group of aged high-tech gurus. They are people who can help analyze and advise venture capitalists on investing in high-tech companies with potential," said Taipei Computer Association (TCA, 台北電腦公會) vice chairman Huang Yun-pei (黃鋆鋇).

Huang said the government should play a key role in recruiting professionals, such as former Philips Electronics board member Lo Yi-chiang (羅益強), to participate in the establishment of such angel clubs in Taiwan.

"With their professional endorsement, high-tech startups may find it easier to raise capital," he said.

Victor Tsan (詹文男), managing director of the Market Intelligence Center (MIC, 市場情報中心), who also attended yesterday's event, urged the government to take the initiative in pushing forward the establishment of angel club.

Tsan said that such clubs could be established by joining forces with semi-official institutions, such as the Industrial Technology Research Institute (工研院), which own "incubation centers" to create value-added innovation.

In addition to angel clubs, the government should also work to create a fair mechanism for appraising intangible assets, CIER's Yang said.

She said the government should first revise laws to allow governmental funds to invest in venture capitalists, training professional appraisers and providing credit guarantees to high-tech borrowers.

Taiwan, however, is still developing a mechanism to appraise intangible assets.

The nation's first intangible assets appraisal association, chaired by Cheng Ting-wong (鄭丁旺), was officially launched on June 23 this year.

The association is making an effort to update and maintain a database that can be used to propose criteria for bank creditors to appraise intangible assets while granting loans.
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