The Taiwan-Silicon Valley Connection

Panel members share their insights at Taiwan Accelerator's U.S. Demo Day in San Francisco. Photo: Taiwan Accelerator

The nexus between the two locations is playing an important part in Taiwan’s efforts to cultivate startups.

At a demo day in San Francisco organized by Taiwan Accelerator and Startups Greater Asia last October, nine Taiwanese entrepreneurs took the stage at the Google Developers Launchpad Space and for the first time pitched their fledgling startups to an audience of U.S. investors. The nature of the companies varied widely – including an online medical payment platform, a delivery service for health foods; and an artificial intelligence system to assist online sellers.

Although the English of the presenters was at times faltering, their obvious expertise and earnest enthusiasm for their ventures more than made up for the occasional grammatical stumble.

It takes a lot of guts to go up on stage in a foreign country and pitch your big idea, but it is a step that these entrepreneurs need to take, says Taiwan Accelerator Founder Kevin Yu. Given the small size of Taiwan’s market, startups need to look abroad to grow, he says. And to make any headway internationally, “you have to think and plan from a regional or global perspective on day one.”

Pitches from the company RMTC featured “DailyHand,” a device to help with stroke rehabilitation. Photos: Silicon Valley Forum

The stakes are high as these entrepreneurs take their first steps out onto the global stage, and not just for the startups themselves. Taiwan’s government has launched a number of initiatives in the hopes of spurring more innovation in its economy, which has long relied on computer hardware and other forms of manufacture. Many believe that Taiwan’s burgeoning startup scene, if it is to be successful, will need to make inroads with leading tech hubs around the world – and in Silicon Valley in particular.

“Taiwan has great engineering talent. We produce some of the world’s finest engineers, and we need to find a way for them to step onto the world stage, and I think Silicon Valley would be a good stage for them to demonstrate their talents,” says Kuomintang Legislator Jason Hsu, who is also a co-founder of TedXTaipei and a founding member of the Taiwan FinTech Association.

“We can no longer ride along yesterday’s success: the science park, the semiconductor industry, the electronics industry,” he says. “We need to figure out what’s the next big pillar for Taiwan.”

To that end, Taiwan’s government launched the Asia Silicon Valley Development Plan in September 2016. The initiative has the twin goals of boosting Taiwan’s internet of things (IoT) industry as well as giving extra support to the country’s startup and entrepreneurship ecosystem.

Pitches from the company RMTC featured “Robotelf” for interaction with children and the elderly. Photos: Silicon Valley Forum

To boost funding for innovative initiatives, the National Development Council also established Taiwania Capital Management Corp., a venture capital fund supporting IoT, biotechnology, and other strategic industries. Tellingly, the fund maintains an office in Silicon Valley.

The government has also enlisted the services of the Industrial Technology Research Institute (ITRI), Taiwan’s foremost R&D organization, which now leads a handful of talent transfer programs from an office in Sunnyvale, CA. While the government offers support to Taiwanese businesses in cities around the world, “we work with Silicon Valley in a more systematic way,” says Rich Fuh, ITRI’s New Venture Business Development Manager.

The goal is not to replicate Silicon Valley in Taiwan, but rather to see what lessons it has to offer. “There’s a spirit, a culture we want to learn from,” says Fuh. “How people can work together – how a company can get started to bring wonderful stuff to society.”

“If you look at what’s going on in technology and innovation, most things are still happening first in Silicon Valley,” he notes. “So if we don’t get more connections there, there’s a fear we’ll get isolated from developments in the rest of the world.”

Another asset that Silicon Valley has to offer is experience. In Taiwan, “there aren’t as many people who have ‘been there and done that’ before, so at the human capital level it’s a bit more of a challenge,” says Klaus Wehage, the Head of International Relations for the Silicon Valley Forum. The talent networking non-profit is drawing on decades of Silicon Valley experience to assist Taiwan’s government-led startup campaign.

The Silicon Valley Forum provides an opportunity for Taiwanese startups to gain practice pitching their projects. Photo: Silicon Valley Forum

In contrast to the situation in Taiwan, Wehage says, “literally at any corner in San Francisco you can stumble upon people who could potentially be a resource for your organization.” The trick, though, is helping Taiwanese entrepreneurs gain access to that rich startup scene.

For that purpose, over the last year the group has invited industry experts from Silicon Valley to Taiwan for intensive workshops, and has also brought Taiwanese startups to the Bay Area to gain experience at pitch events.

Back in Taiwan, Taiwan Startup Stadium (TSS) is working on a similar set of problems. The startup hub was created by the National Development Council in 2015 to provide a bridge between Taiwanese startups and the international market. TSS provides training to startups along with the chance to travel to tech conferences around the world.

Among other benefits, this international travel provides an important opportunity for entrepreneurs to come face to face with their potential international competition. “In Taiwan many teams operate in a bubble,” says Holly Harrington, the group’s co-founder and general manager. “It’s very easy to be fooled into thinking you are unique, and in Taiwan everyone is very supportive of the ecosystem,” she notes. “Getting out of your comfort zone is really important.”

The travel – to Silicon Valley and elsewhere – also provides a chance to become more familiar with companies’ target markets. “You can’t build a product for an audience you don’t fully understand,” Harrington says. “Until you’re actually there, understanding consumer behavior and what businesses need is a lot tougher.”

Holly Harrington, General Manager of Taiwan Startup Stadium (TSS), speaking at the group’s #TaiwanRocksSF demo day. Photo: TSS

Cultural factors

In addition to nurturing business skills, TSS is also trying to help entrepreneurs to work across cultures. One important talent is how to present oneself. “In Silicon Valley, saying that you’re the best at what you’re doing is respected, whereas in Taiwan it’s seen as a bit over the top or arrogant,” says Harrington.

Difficulty in obtaining domestic funding is another factor that brings many startups to California.

“Hopefully in the next five to 10 years it won’t be as useful for Taiwan startups to go to Silicon Valley to look for money, but at this stage – until we have a more well-rounded ecosystem – it’s definitely still necessary,” says Harrington.

Foreign investors can also provide key business insights, which is especially important given that many of Taiwan’s startup founders are engineers without much prior business experience.

A Silicon Valley venture capitalist “probably has a much greater sense of the value of what the startups are building in Taiwan than the startups themselves do,” says Harrington. “If they have the money and the right strategic investors from overseas who can see how this tech can be put into solving problems, that’s a perfect match.”

One huge advantage for the startups currently looking to break into Silicon Valley are the many Taiwanese professionals and entrepreneurs already there. Jerry Yang, who co-founded Yahoo; Steve Chen, who co-founded YouTube; and Jensen Huang, who co-founded Nvidia are just a few of the most prominent examples. Men and women of Taiwanese heritage are well represented at tech companies throughout the United States.

Making their presence felt, the North American Taiwanese Science and Engineering Association’s membership has reached 2,000, according to the trade group’s website. Its Silicon Valley chapter organizes numerous industry forums, and over the past year has played host to a number of delegations from Taiwan led by mayors and high-ranking ministry officials.

“If Taiwan can leverage the resources that are already here and the people that are already here – people who can understand and work with both cultures – that could be a massive benefit for both countries,” says Wehage of the Silicon Valley Forum.

Some companies are already leveraging that in-between position. An example is Tricella, an IoT medical device company based in Mountain View, California. The engineering department is located in Taiwan, but the marketing, sales, and product concept functions are handled from its U.S. office.

Daniel Weng, the company’s founder and CEO, says basing his engineers in Taiwan was an appealing option given the country’s strong work ethic and relatively low rate of employee turnover. He describes himself as cautiously optimistic about the prospects for Taiwan’s startup sector, and expresses hopes that while working at Tricella, his engineers will soak up some Silicon Valley culture. “If people leave our organization, they will bring a lot of our values into the next organization,” he says. “For lack of a better word, it’s infectious.”

Weng says that he would like to see more knowledge-sharing take place in Taiwan. He and many other observers feel that a reluctance to mentor emerging talent or share industry insights is a key barrier to the success of Taiwan’s startup ecosystem.

“When people start sharing their ideas and their ways of doing things, it will improve the overall talent pool as a whole, because when more people start sharing, they cross-pollinate, and they learn from each other instead of just doing things the way they’ve been doing them for a decade,” he says.

Despite its promise, Silicon Valley is still an extremely difficult nut to crack. Competition is fierce: the market is jam packed, and investors have plenty of companies to choose from. As a result, many insiders are advising startups to look to other tech clusters to grow their business. For many, the most promising opportunities will be found not in Silicon Valley, but in other regions of the United States or in the growing markets of Southeast Asia.

Even if startups cannot make it big in Silicon Valley, though, the region still offers valuable experience, says Jamie Lin, a founding partner at Taipei-based accelerator AppWorks.

Referring to the Taiwanese startups he has worked with that spent some time in Silicon Valley, he says: “You can see they matured quite a bit. It’s essentially like trying out in the major leagues. You spend all that time in spring training with all the top players in the world, and even though you don’t make the cut, when you return back to your own country you become much stronger.”

Ray Kung, CEO of Akohub, pitched at #TaiwanRocksSF demo day. Early this year Akohub enrolled in the accelerator hosted by the New York City Media Lab. Photo: TSS

Why Taiwan?

On the flip side of the coin, many see opportunities in Taiwan for Silicon Valley based companies.

Elisa Chiu is the founder of Anchor Taiwan, a group that aims to help entrepreneurs enter Asia by providing working-tour packages in Taiwan tailored to the needs of digital nomads. “We are trying to provide a very holistic experience for our clients to have a smooth softlanding experience for Asia through Taiwan,” she says.

Their flagship program offers 30 days of immersion in Taiwan that include tech forums, visits to local companies, cultural excursions, and a work space in Taipei. Chiu says Taiwan boasts a number of important assets including well-developed infrastructure, unmatched manufacturing talent in a range of industries, and an affordable cost of living. Its central location also allows easy access to countries throughout Southeast Asia.

“If you’re really smart, you should probably already be here,” she says. “I truly believe that.”

Underscoring her point, Taiwan has recently attracted interest from a number high-profile U.S. tech companies. Both Amazon and Microsoft set up new research centers in Taiwan in January, and late last year Google spent more than US$1 billion to acquire a portion of HTC’s engineering and design staff.

Chiu views cooperation between Taiwan and Silicon Valley as a win-win scenario. On the one hand, Western entrepreneurs can learn from the Taiwanese on how to enter the Asian market.”

On the other, Taiwanese young people can benefit from the Silicon Valley creed that failure is not something to be feared. “You should find out what you are passionate about, and go and pursue that,” she says. “That alone is very valuable.”

Beyond the business reasons to come to Taiwan, Chiu cites the country’s lifestyle as a strong attraction for many entrepreneurs. “My experience is that when people spend some time with Taiwan, they tend to fall in love with it,” she says.

A sense of shared values may also help strengthen ties between Taiwan and Silicon Valley.

California State Assemblyman Evan Low, a Democrat whose district lies in the heart of Silicon Valley, has visited Taiwan multiple times during his time in office to meet with political and business leaders.

In an interview with Taiwan Business TOPICS, he applauded recent progressive developments in Taiwan, including election of the first female president, the soon-to-be-realized legalization of gay marriage, and the government’s appointment of Audrey Tang –Taiwan’s first transgender cabinet minister.

“Even in these United States, we aren’t able to do that,” Low said of Tang’s appointment. Given that Taiwan “is so advanced in this progressive blanket in the Asian region,” Low says, “there’s just a natural tendency to focus on the relationship there.”

Taiwan’s many advantages notwithstanding, observers point to a number of challenges that may deter some foreign entrepreneurs. Business insiders, for example, have long complained about the country’s cumbersome business regulations and restrictive financial system.

Legislator Hsu says that as it stands, many tech companies are looking instead to Singapore for its English-friendly government services, supportive tax environment, and regulations that make it easier to higher foreign professionals. “If we want to compete with other Asian countries on innovation, we need to move fast, and our government has to be mobilized to persuade these companies to come to Taiwan by offering them good deals and good terms,” he says.

— Keith Menconi, a former resident of Taiwan, is a journalist based in the San Francisco area.