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Entrepreneurship In Taiwan Past Present And Future V2.0


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Apresentation given on May 13 2008 at Stanford University (course EE415)

Published in: Business

Entrepreneurship In Taiwan Past Present And Future V2.0

  1. 1. Entrepreneurship in Taiwan: Past, Present and Future Bevan Wu BW & Associates [email_address]
  2. 2. Contents <ul><li>Claimer and Disclaimer </li></ul><ul><li>Key Elements for Entrepreneurs </li></ul><ul><li>Culture and Entrepreneurship </li></ul><ul><li>Taiwan Entrepreneur per Bevan Wu </li></ul><ul><li>The Glorious Past 1980-2000 </li></ul><ul><li>Present – The Crunch and Taiwan VC in 2006 </li></ul><ul><li>Future and Challenges to Taiwan Entrepreneurs </li></ul>
  3. 3. Claim & Disclaim <ul><li>The views and comments in this presentation are all Bevan Wu’s personal </li></ul><ul><li>They do not represent the view or opinion of ITRI (Industrial Technology Research Institute of Taiwan), ITRI-International (San Jose) and Stanford US-Asia Technology Management Center </li></ul>
  4. 4. Three Key Elements for A Successful Entrepreneur
  5. 5. Culture and Entrepreneurship <ul><li>NA EU Asia-Pacific </li></ul>Risk taking Strong R/D Innovative Prod/Mkt’g Creative R/D Consortiums Entrepreneur Fast, Agile High Rollers?
  6. 6. A Closer Look <ul><li>NA EU Asia-Pacific </li></ul>The Others Korea The Other Asia-Pacific countries Taiwan China Brussels UK F G Japan
  7. 7. Risk - Creating New Mkt Risk Averse –Expanding Existing Mkt Agile-Speed to the Market Evolutionary-High Quality Taiwan Entrepreneurs and Its Global Status per Bevan Wu TW USA EU Japan
  8. 8. Taiwan Entrepreneur per Bevan Wu <ul><li>A person rather be a head of a chicken than a tail of an ox (Taiwan c olloquial ) but they are not necessarily like Bill Gates, Steve Jobs </li></ul><ul><li>One who is always ready to catch opportunities around him and realizes his dream </li></ul><ul><li>One who has mentality like Viet Cong and did graduate study in West Point </li></ul><ul><li>Very adaptive in importing technology, ideas and finance from anywhere in the world </li></ul><ul><li>A kamikaze pilot who completed 100+ landing </li></ul><ul><li>Comfortable in Taiwan business culture – If there is a policy/regulation there always will be a solution </li></ul>
  9. 9. An Example: How Come Taiwan LCD Industry Rose So Fast – Asked VDMA Germany <ul><li>In 2001 I was asked by German VDMA to make a presentation in Semicon-Europa on the subject of “How come Taiwan moved so fast in the LCD Business?” </li></ul><ul><li>After given many academic answers as well as statistics I came to one simple conclusion </li></ul><ul><li>That is Taiwan’s Entrepreneurship Spirit </li></ul>
  10. 10. The Glorious Past 1986 –2000 <ul><li>Government Initiated VC programs to stimulate Taiwan High Tech industry growth –Combine Gov $ with Buz $ </li></ul><ul><li>Expatriates back to Taiwan as Entrepreneurs </li></ul><ul><ul><li>Ex AT&T Club 150+ </li></ul></ul><ul><ul><li>Ex IBM Club 100+ and they started Hsinchu Science and Technology Park (HSTP) infrastructures </li></ul></ul><ul><ul><li>They contributed close to 90% of the start-ups in HSTP </li></ul></ul><ul><li>Staged VC activities -1985, 1991,1998 Created more than 130 start ups </li></ul><ul><ul><li>26 S/C, 14 OptoE, 55+IT/Comm/Networks,38 BioTech… </li></ul></ul><ul><li>THE REST IS HISTORY – UMC, TSMC, Acer, AUO….. </li></ul><ul><li>Even ITRI started its own VC - Industrial Technology Investment Corporation (ITIC) in 1979 ( Retain 5%-10% option right to invest) </li></ul>
  11. 11. Taiwan Mechanism for Encouraging Entrepreneurship IPR Protection R &D Project Ideas R&D Incubator Centers- ITRI and other 30+ VC Start ups Government Fund Techno-logy Service network Expansion Mezzanine IPO Capital <ul><li>Company Law </li></ul><ul><li>Stock option </li></ul><ul><li>Warrant </li></ul>Trade Mkt for non-IPO stocks Source: Council for Economic Planning and Development, Taiwan SBIR
  12. 12. Local Companies (71%) Local Individuals (21%) Foreign Companies (7.3%) Others (1% <) Where does the Venture Capital come from ? — Funding Source of Taiwan VCs ( FY 2000) <ul><li>Hi-tech industry 9.79% </li></ul><ul><li>Traditional industry 33.03% </li></ul><ul><li>Investment Institution 12.61% </li></ul><ul><li>Insurance companies 8.66% </li></ul><ul><li>banks 5.4% </li></ul><ul><li>government 1.73% </li></ul><ul><li>others </li></ul>
  13. 13. Capital Formation of Taiwan VC industry (1984-2000) 2000 1995 1900 1985
  14. 14. New Venture Funds Founded per Year (1984-2000) Source: 2000 Taiwan Venture Capital Industry Annual Report 7 Start from 1984 96 97 98 99 The inception of incubator (1996) 1985 1990 1995 2000 46 31 38 28 14 6
  15. 15. Geographic Distribution of VC Firms in Taiwan Over 96% VC funds and over 50% incubators are located in northern Taiwan 164 VCs Taipei city 7 VCs in Taipei County 1 VC in Taoyan 4 VCs in Hsinchu city 5 VCs in Kaoshung city 1 VCs in Kaoshung county
  16. 16. Taiwan VC Portfolio Analysis by investment stages By Project No. ( Total 6343) By Dollars (~$4 B) 45.81% 21.16% 23.87% 7.98% 1.18% 45.32% 21.94% 7.93% 23.84% Expansion Startup Mezzanine Seed Turnaround
  17. 17. Earnings of Taiwan Venture Funds 95 2000 Average (The Earliest Ten VCs) Average (Total) 94 96 97 98 99
  18. 18. Then Comes the Crunch 2000- <ul><li>The Internet bubble (2000-2001) </li></ul><ul><li>Cancellation of tax incentives (amidst Taiwan’s culture revolution) </li></ul><ul><li>The rise of China caused unofficially funding moves-Taiwan economic growth Dropped-off </li></ul><ul><li>Both Taiwan and USA have had interesting presidents during this period </li></ul><ul><li>VCs became conservative – few seed funding, asking for purchasing orders, move to traditional industry…sounds familiar? </li></ul>
  19. 19. Taiwan People and Capital Go West <ul><li>From coastal provinces to northwest interior China there are Taiwan business people there </li></ul><ul><li>In Great Shanghai Area there are 400,000 Taiwan business people </li></ul><ul><li>In SMIC there are alleged 150+ TSMC alumni </li></ul><ul><li>Actual Taiwan investment in China is difficult to obtain unofficial estimation is between $100B to $150B but the official Taiwan government approved China investment is far less than that </li></ul><ul><li>Go west may be one of the reasons for the downsizing of Taiwan VC locally </li></ul>
  20. 20. Taiwan Investment in China Source: Cross-Strait Economic Statistics Monthly - 70.42 3.39 4.81 2004 13.71 65.99 7.70 11.67 2003 12.22 66.61 6.72 10.09 2002 5.61 38.80 2.78 7.18 2001 4.39 33.93 2.61 7.68 2000 2.38 27.71 1.25 4.52 1999 3.47 38.17 2.03 5.33 1998 6.73 59.96 4.33 7.23 1997 2.24 36.21 1.23 3.39 1996 2.27 44.61 1.09 2.45 1995 2.23 37.31 0.96 2.58 1994 8.13 65.61 3.17 4.83 1993 Taiwan Investment in China as share of China Contracted FDI ﹪ Taiwan Investment in China as share of Total Taiwan FDI ﹪ Taiwan Investment in China Taiwan Direct Foreign Investment (FDI) (including China)
  21. 21. No of VC New VC Growth Rate Taiwan VC History 1998 - 2006
  22. 22. $ in M ~1,000 ~500 0 ~500 New Capital Infusion Rate of Increase Taiwan VC Capital History 1998 - 2006
  23. 23. Taiwan VC Investments -2006 Electronics Traditional Mfg Semiconductor Optoelectronics Biotechnology IT Precision Machinery
  24. 24. Future Challenges to Taiwan Entrepreneurs <ul><li>Globalization and China’s economic power force Taiwan entrepreneurs to play a new ball game with one hand tied behind their back – political ideology and economic reality across the Taiwan strait </li></ul><ul><li>Two shores 3 places – people in Taiwan, HongKong and China basically think alike but behave differently </li></ul><ul><li>Transformation from a culture of importing technology, engineering and manufacturing to knowledge rich creative culture is not easy </li></ul><ul><li>Multi-disciplinary team approach is required for system oriented product development – it is not Taiwan’s strong suit </li></ul><ul><li>The rich stops at the third generation made the life of Taiwan entrepreneurs even more difficult </li></ul>
  25. 25. Example:Wii Almost <ul><li>A TW Group worked on a 3D Mouse which is a Wii wand in principle </li></ul><ul><li>It reached the pilot production stage </li></ul><ul><li>Was focused toward PC mouse replacement market but not toward game applications </li></ul><ul><li>Being in TW they were not privy to the 20+ S/W people company in the Silicon Valley who made Wii possible for Nintando </li></ul><ul><li>Showed weakness of multi-disciplinary team cooperation and system product development capabilities </li></ul>
  26. 26. The Future is Bright if…. <ul><li>Wise political leadership to maintain peaceful Taiwan strait status quo focusing on R/D and economic development </li></ul><ul><li>Capitalize Taiwan’s window of opportunity (next 3-5 years) its advantages in high tech areas and its globalization experience complimentary with China market potential </li></ul><ul><li>Import talents from all over the world (incl. China) to rejuvenate Taiwan’s talent pool </li></ul>
  27. 27. The Win-Win Combination <ul><li>NA </li></ul>EU Asia-Pacific Taiwan
  28. 28. Thank You For Your Attention Bevan Wu [email_address]