At a coffee shop in Taipei on a Friday evening, the air was buzzing with excitement and conversation flowed freely among about 40 people, mostly in their 20s and 30s.
Before long, people were invited to speak.
“I am looking for someone who knows how to build iOS applications and is interested in developing educational apps for children,” said Wang Feng-cheng, the founder of an Internet startup that focuses on children’s education.
“My partner and I will be sitting over there, come and talk to us,” he said.
Hardly a conversation one would expect at a social gathering, but this is not a normal get--together. It is a monthly event aimed at encouraging young people to start their own Internet or technology companies. Such events have become popular in Taipei in recent years.
There are signs that a support network for startups in Taipei is also gradually taking shape.
It is estimated that Taiwan has about 2,000 Internet startups, up from just a handful a few years ago, according to the government-funded Institute for Information Industry’s Innovative DigiTech-Enabled Applications and Services Institute.
The rapid growth in Internet startups is no surprise, considering entrepreneurship is an integral part of Taiwan’s DNA — small and medium enterprises have long been the backbone of the national economy.
Some Internet startups are working on building a virtual currency exchange center enabling users to exchange credits from different online venues; others aim to create the ultimate online menu by bringing together all the restaurant menus in Taiwan; while still others help the undecided make up their mind by asking netizens to make the final choice for them.
For new college graduates in Taiwan, working in big companies and climbing the corporate ladder has long been considered the way to go, but an increasing number of people are turning away from this traditional career path.
They believe the future lies not in being stuck in a cubicle for years, but in building a million--dollar business and becoming the next Mark Zuckerberg, the founder of Facebook, before turning 30.
“Joining a startup offers one a broader view than working at a big company and doing specific tasks. A successful startup offers a fast track to greater wealth,” said Jamie Lin (林之晨), the host of the cafe get-together and one of the masterminds behind Taipei’s budding startup support network.
Lin co-founded appWorks Ventures, a company that help -incubate Internet startup companies.
He and three other co--founders provide counseling services, free office space, mentoring by successful entrepreneurs and networking opportunities with venture capitalists. In return, their company gets the first chance to acquire small stakes in promising new firms.
“At the end of the day, it’s all about the community,” Lin said when speaking about the purpose of a startup mixer.
As the road to entrepreneurship can be a lonely path, startups need to meet up frequently to exchange ideas and push one another along, Lin said.
The year-old program has produced three batches of startup entrepreneurs. The third only graduated from the program last month after presenting their projects to more than 700 entrepreneurs, electronics heavyweights and venture capitalists.
All of them started their companies during the program and some earned major sponsorship from investors after their presentation.
“Trends, ideas and startups come and go, but it’s the people that continue to work on new things and challenge the status quo that matter,” Lin said.
Paul Kuo, a priest-turned--entrepreneur who started a company that turns complex stock market information into graphs, says that not enough government resources have been dedicated to the software sector and where government funding for early-stage companies does exist the lengthy application process deters startups from applying.
Kuo said he tried to apply for the Ministry of Economic Affairs’ Small Business Innovation Research (SBIR) program, which has NT$900 million (US$30 million) in funding for small and medium-sized enterprises this year. However, the huge amount of paperwork was overwhelming for his small, understaffed firm.
To be approved, each project has to go through several stages of scrutiny.
Xinosys Co chief executive Even Chung (鍾亦恒), one of the winners of the this year’s Asia Red Herring Award, which honors innovative tech companies, applied to the SBIR program. Much to his disappointment, a panel of judges seemed out of touch with business reality.
“They said my company should tackle bigger problems,” he said. “However, the ‘small’ problems I am dealing with are already challenging enough.”
Lin agreed and even called the government funding program “toxic.”
“Startup companies need to constantly change direction, to -adjust to the needs of their users. The government’s set-a-goal-then-execute-it style of funding programs contradicts the logic of entrepreneurship,” he said.
As a result, changing one’s mind or strategy in the middle of a project, even when one realizes the idea does not work, is impossible.
“The result is a startup that successfully executes a bad plan,” he said.
Chang Ming-huan, a specialist at the ministry, said the SBIR program’s rigorous evaluation process ensures taxpayers’ money is not wasted
Some startups suggest Taiwan’s government should learn from the White House’s Startup America Initiative — which commits US$2 billion in funding to small, early-stage companies.
The US government is also tweaking its immigration laws to encourage startups from around the world to establish their headquarters in the US and create jobs for Americans.
In contrast, Taiwan has yet to develop its own startup environment, Chung said, saying that local software engineers are trained to look for steady jobs, whereas those in Silicon Valley often jump at the chance to work with a successful startup.
“When a young college graduate faces many career choices, and you do not offer him many incentives to work at your company, he’s not going to say yes,” Chung said.
One of the biggest factors drawing college graduates to big companies is the ability to opt-out of mandatory military service.
Corporations can provide three-years of paid employment for male applicants with specialty skills, which exempts them from the full-year of mandatory military service.
Startups cannot offer such incentives because regulations stipulate that each company can only hire one-third of its R&D talent through the program — and that translates into just one employee at startup companies because most have a staff of no more than four people.
Military service also encourages college graduates to fit in and not ask questions, the opposite of being creative.
“The country spends four to six years training a software engineer [at college] and then as soon as he graduates, he is sent into the military to learn how to obey orders,” Lin said. “Software developments require the ability to think outside the box, whereas the military teaches the diametric opposite.”
Despite the challenges, incubator programs, such as the one offered at appWorks Ventures and many similar ones at local universities, are signs that the startup environment in Taipei is gradually improving.
Other signs that the city is becoming a friendlier place for startups include more competitions to come up with the best mobile applications and the Taipei City Government’s provision of funding for new companies.
A Japan-based startup support company recently established a Taipei branch, another indication that the local environment has matured to the stage that it is now attracting overseas investors.
Despite the encouraging signs, the worst enemy an entrepreneur faces on the lonely road to building a startup is nearly always him or herself.
As Paul Kuo put it: “When a person is deprived of a stable income, their personality and self-image is altered and destroyed to some extent. Only the strong are able to keep moving forward.”
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