As COVID-19 wreaked havoc across the globe, putting countless businesses on the brink of collapse, it has also given birth to new business opportunities oriented to remote working. In fact, the pandemic-driven “Work-From-Home” economy has led to a growing number of unicorns – startups with valuations above $1 billion. According to CB Insights, in the first half of 2021 alone, 203 unicorns have emerged worldwide.
As the total number of these unicorns has tipped to above 700 around the world, Taiwan is mooted to be one of those locations with a high potential to pump out world-class unicorns. Speaking at 2021 CONNECT (Link in Chinese), a leading Taiwanese tech forum co-organized by TechTaiwan, Google Taiwan’s former director Dr. Lee-Feng Chien offered his insight on Taiwan’s startup and investment environment, outlining the challenges faced by Taiwanese startups and the country’s significance to the global investment community.
“Taiwan’s capital market has started paying attention to digital economy”
At the moment, Taiwan already has three unicorns. The most prominent among them is Gogoro, a leading e-bike manufacturer that has been expanding its presence in the US, Europe and India. Another unicorn is 91APP, a software company that facilitates small merchants to launch e-commerce apps. The third unicorn, Appier, is an AI software company founded in 2012, counting among its investors SoftBank Group and Temasek Holding, and has recently gone public on the Tokyo Stock Exchange, raising US$130 million. In fact, Appier is the first Taiwanese company to be listed in Japan since 1998.
“The success of 91APP signifies that Taiwan’s capital market has started paying attention to digital economy, willing to give it a higher valuation,” observed Chien who, in his time as Google Taiwan’s director, oversaw its foundation from scratch, and eventually made it Google’s largest hardware R&D hub outside of the US. By introducing three data centers, Google also laid the foundation of Taiwan’s data economy.
“Appier’s listing means that Taiwanese startups have the capability to make it abroad,” Chien commented, expressing his optimism toward Taiwanese startup scene’s recent developments. According to the Google veteran, if more startups can expand beyond Taiwan as Appier has done before, it will be a boost to Taiwan’s digital economy. Constrained by the size of real economy though, startups in the digital economy sector have so far accounted little in Taiwan’s GDP.
The rise of super-unicorn startups
The wave of digital transformation ushered in by the pandemic, however, is regarded by Chien as the opportunity of the decade for Taiwanese startups. He noted that COVID-19 altered the traditionally conservative investment strategy of private equity funds. As investment returns dropped, private equity funds have increasingly moved into venture capital investments.
This latest development is simultaneously a challenge and a chance to Taiwan’s startup landscape: while it pushes unicorn startups to the forefront of post-pandemic global economic revival by funnelling in the surplus in the capital market, creating so-called “super-unicorns” valued above US$10 billion in the process, it also diverts investments away from early-stage startups.
“It is the best time to fundraise for startups, but not necessarily for launching them,” Chien observed. Under these circumstances, he pointed out that in addition to the home market, Taiwanese startups would have to secure at least one overseas market , just like Appier did, to attract the global capital market. The internet-based digital world, he observed, could lower the threshold with its borderless nature, and Chien considered it a must for Taiwanese unicorns to engage with this platform to expand its horizon.
However, Chien also set his sight beyond digital economy, considering its growth peak to be over and competition already too fierce. Instead, he identified space, especially the satellite industry, to be the likelier sectors from which the next unicorns will emerge.