Taipei-based Accelerator AppWorks has established a US$50 million startup fund. Eight conglomerates and one government organization contributed to the fund including Cathay Life Insurance, the National Development Fund, Phison Electronics, best known as a maker of flash drives, Far Eastern, the island’s third-biggest telco; CID group, a Shanghai-based VC firm best known for investing in Taiwanese semiconductor firms; and China Trust Capital.
This is great news for the island’s startup ecosystem that boasts many highly talented computer engineers and top hardware manufacturers, but lack money to scale their enterprises.
AppWorks’ founding partner Jamie Lin says that the fund will be used to support local startups that go through its accelerator program, focusing on mobile commerce and the development of software and hardware for the Internet of Things. The accelerator has been active since 2010. To date, it has graduated more than 190 teams. Its investment branch, managed by IC Jan, Nice Cheng, Joseph Chan, and Lin, funded 19 portfolio companies through its previous US$11 million fund.
Two of its portfolio companies, game developer PubGame and e-commerce company Kuo Brothers, are going public later this year.
Lin told Tech in Asia that AppWorks will run its second fund much like its first, but the plan is to bring more Southeast Asian teams into its network, and also help local teams expand into Southeast Asian markets.
The island’s startup scene has been lagging behind markets like Singapore, Hong Kong, South Korea and Japan. There are several factors that contribute to this situation: the lack of trust of the tech sector, investors, and policymakers in the Internet age; its large hi-tech companies remain focused chiefly on contract electronics manufacturing; local venture capitalists favour later-stage investments in hardware, and the overall regulatory system hasn’t been favourable to the development of startups until recently.
The latter factor is changing though. The government is taking steps to support the local startup scene. Under the National Development Council’s HeadStart project, the government has invested over US$80 million across four private VC firms, including AppWorks, to spur growth among the island’s startups. It is also relaxing restrictions on hiring foreign talent, and is building a 20,000-square-meter startup cluster to house local and international teams.