To help the venture capital (VC) industry prosper, the government should invest in the sector and loosen regulations on venture capital firms to allow them to invest in Chinese companies, a leading institutional investor said yesterday.
"The venture capital industry has encountered an unprecedented bottleneck due to the worldwide recession in recent years," said Paul Wang (
"We need a great push from the government, so that we can keep supporting the nation's crucial high-tech industry as we did for the past 20 years," Wang said.
Wang made the remarks at a press briefing to introduce next month's "2004 Taiwan Venture Forum." The event will be held in Taipei on Nov. 9 and is aimed to improve international prospects for the industry, he added.
Speakers at the forum will include United Microelectronics Corp (聯電) chairman Robert Tsao (曹興誠), Acer Group chairman and CEO Stan Shih (施振榮), Mitac-Synnex Group (聯華神通集團) chairman Matthew Miau (苗豐強) and other prominent local business leaders.
VC firms usually start as funds investing in equities and bonds, and then try to convince other institutions, corporations, or wealthy individuals to passively invest in the fund. They then move on to search for opportunities to invest in private firms, generally unproven start-ups.
Taiwan's venture capital business began to take off in 1984. Since then, more than 200 VC companies have launched, and have invested a total NT$120 billion in 8,000 investment projects, according to statistics compiled by the association. About two-thirds of the nation's publicly-listed companies get funding from VC firms, the association said.
Another association official also lamented the lack of government funding for local VC firms.
James Chew (邱羅火), vice chairman of the association, said most overseas VC companies are financially backed by their nation's governments, which provide about 70 percent of their funds. In contrast, the funding for local VC firms is mostly from private enterprises and individuals, making the money supply extremely unstable, he said.
The Singapore government, for example, makes use of pension funds and foreign exchange reserves to nurture their VC industry, making the country a private equity hub in Asia, Chew said.
With China's roaring economy now soaking up venture capital from all over the world, Taiwan shouldn't be left out of the action, given the huge number of Taiwanese businesspeople based there, Wang said.
"With deeper understanding of China due to language and cultural similarities, Taiwanese venture capital companies have a better chance of making money in that massive market," Wang explained.
Currently, the Taiwanese government bars local VCs from directly investing in China.
Looking ahead, Chew said the industry should invest in industries with high growth potential, such as online gaming, digital content and other knowledge-based emerging industries, instead of concentrating too much on the high-tech sector.
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