Taiwan’s newly minted government has an underused tool at its disposal to combat the recession: an exchange-based crowdfunding program for promising technology start-ups.
The two-year-old initiative aims to do crowdfunding one better by having the Taipei Exchange — the smaller of the nation’s two bourses — endorse candidates for the program. Applicants are vetted before they are allowed to register on a start-up board and commence fundraising from the public.
The initiative might gain momentum now that President Tsai Ing-wen (蔡英文) has identified innovation as key to helping reverse three straight quarters of economic decline.
Financial Supervisory Commission Chairman Ding Kung-wha (丁克華), who spearheaded the program, said the start-up board exemplifies how markets can support the real economy. It also prepares companies for full-fledged main-board listings.
“This new board does three things: it helps companies get talent, get capital and raise their profile,” Taipei Exchange start-up incubation department general manager Eric Lin (林家生) said by telephone.
Eighty-seven companies have registered so far on the start-up board, of which only three have hit their targets and earned public listings. They have cumulatively raised just NT$1.1 billion (US$33.7 million) from individual and professional investors.
While nascent, the program sports several success stories. Brinno Inc (邑錡), which designs and produces photography equipment, is one such beneficiary: since joining the initiative, it has managed to grow its market value 16 times to NT$1.6 billion.
Another, HyXen Technology Co (勝義科技), has attracted strategic investment from iPhone-assembler Hon Hai Precision Industry Co (鴻海精密).
Overall, the exchange has aided start-ups from three of Taiwan’s most important industries: electronics, biotechnology and creative media, which now comprise more than three-quarters of the program’s registrants.
“The main fear in crowdfunding centers on the health of the start-up’s management and finances, but the backing of the government lends confidence,” Brinno president David Chen (陳世哲) said.
The exchange’s effort is just one facet of a broader government initiative to try and jumpstart a long-overlooked start-up scene.
Since Tsai took office, her administration has pledged to create a NT$100 billion nationwide innovation fund.
Yet, they can only do so much, Beyond Asset Management (晉昂證券投顧) president Michael On (洪瑞泰) said.
While the government can help entrepreneurs access capital, the main attraction for investors is ultimately sustainable revenue growth, he said.
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