Taiwanese start-ups overseas
Taiwan Startup Stadium hosted a series of events in California’s Silicon Valley last month to showcase Taiwanese startups. Founders flew in eager to meet like minds, raise money and pitch their companies.
However, after attending a welcome-barbecue on the first day, the question that left me thinking the most was not “What do you do?” but “Where are you located?”
It turns out these start-ups are located everywhere. Many in Taiwan, of course, but also in Europe, California and Russia. One New York-based founder told me the Taiwanese government paid for his domestic travel across the US to attend the event.
Government support for expatriate entrepreneurs is a good strategy, but from what the founders at this BBQ told me, Taiwan’s request to these founders was too soft: Just register your company in Taiwan even if you do not meaningfully operate there.
The government should be focused not just on helping its citizens abroad, but also leveraging the overseas population to stimulate the economy back home. You do not have to ask them to return to do it — that would be unrealistic anyway.
Instead, sweeten the support for overseas entrepreneurs while also asking more: Guarantee investment in their companies as long as they spend that investment on operating a branch office in Taiwan.
Guaranteed investment is not as crazy as it sounds. Many Silicon Valley investors informally operate under a similar model.
“Lead investors” are the first investors in a new company. They are hard to find, hard to please and act as the filtering mechanism to sort the promising companies from the bad.
“Followers” watch what the lead investors do and then just join the deal. If you can find the right lead, as the wisdom goes, the followers are nearly guaranteed to come.
The Taiwanese government should guarantee money as “follower investor” to expatriated citizens as long as they meet two requirements: One, their lead investor is on a small list of prestigious firms, and two, they spend Taiwanese investment in Taiwan.
In other words, if there is business value in opening a Taiwanese branch office, the government would make sure that lack of funding is not the reason it does not happen.
The incentive structure benefits all involved. The government’s money is investment, not a handout. The investment is prescreened by top venture capital firms. It is automatic, which means founders do not waste time seeking it, but it comes with strings attached, which means there is little upside to accepting the offer without legitimate reason to do so.
Startup Stadium’s BBQ event made it clear that the Taiwanese government is already actively supporting its entrepreneurial diaspora abroad. Now it should leverage that talent even further, not by trying to lure it back, but by helping create dual-country startups that turn Taiwan’s success abroad into success at home.
Ted Benson
San Francisco
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