“There seems to be a revival of venture capital companies in Taiwan in the last six months to a year,” H&Q Asia Pacific (漢鼎亞太) founding chairman Hsu Ta-lin (徐大麟) said in an interview at his Taipei office. “There has been serious activity over the past year, which we had not see for about a decade.”
The revival reflects the growing interest of foreign private fund managers on local start-up technology companies, including US venture capital firm Sequoia Capital.
Sequoia has invested in two Taiwanese start-ups including artificial intelligence (AI) developer Appier (沛星科技) and Internet retailer Pinkoi, which sells local brands.
The government has allocated more than NT$20 billion (US$60.7 million) to invest in start-ups, and to finance mergers and acquisitions to explore innovative ideas in collaboration with private equity fund partners.
H&Q would certainly seize this growth opportunity, said Hsu, who is a pioneer in establishing the first US-style venture capital model in Asia in 1985.
“We are applying these kinds of funding from the government [to create our new funds in Taiwan],” Hsu said. “We will try to help start-ups and well-established companies to find new products and new technologies, as well as sponsoring new start-ups.”
That would be the latest move made by H&Q Asia, as the company forecast that the nation’s venture capital market would make a comeback after being quiet for about a decade. H&Q manages US$3.5 billion via 65 funds since its inception in 1985.
Breaking away from the traditional approach of seeking private stakes in start-ups for potential investment returns, Hsu said “H&Q creates a special way to do this.”
H&Q adopted an “accelerator” approach of incubating start-ups with innovative technologies by offering mentorship, access to technology, innovative community and funding, Hsu said, adding that the company in September set up a Global Innovation Center in Burlingame, California.
Selected companies from Taiwan, China, Japan, South Korea and Singapore would send pilot teams there to receive consulting and build up new companies, or launch initial public offerings, before returning to their countries, he said.
As part of the company’s efforts to refocus on Taiwan, H&Q revamped its Taipei office earlier this year. It hired a new general manager, Gary Wang (王崇智), to lead the “accelerator” program by linking Taiwan with Silicon Valley, Hsu said.
H&Q’s accelerator program entered the second phase, in which the company is holding talks with the Industrial Technology Research Institute (ITRI, 工研院) to jointly select companies that have growth potential, Hsu said.
H&Q has identified six sectors with growth potential, including medical devices and wearables, Hsu said, adding that the company is looking at some medical device companies in Taiwan.
One Taiwanese company has developed a non-invasive way of detecting and measuring the blood sugar level, a technology that can be very successful, Hsu said.
H&Q can help the company recruit talent to develop technologies and help sell its products in the global market, he said.
Hsu said Taiwan has an abundant supply of gaming software developers, an area H&Q previously did not notice. These gaming talents are very useful for firms such as social media companies, he said.
These sectors H&Q are looking at are not like the traditional manufacturing sector, Hsu said. “In the globalized world, especially after manufacturing costs became so high, the profit margin in the sector shrunk considerably. Businesspeople have to use innovative products to gain a competitive edge.”
New technologies, including social media, the Internet and the Internet of Things grow much faster than the manufacturing sector, Hsu said.
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