Tech startups in Taiwan have the benefits of plentiful engineering talent and great hardware manufacturers. What they often lack, however, is money to fuel post-seed stage growth and guidance on what markets to tackle next. AppWorks, an accelerator program based in Taipei, wants to solve both problems with a new $50 million multistage venture fund.
Investors include the National Development Fund, Cathay Life, Phison Electronics, media company UDN Group, CID Group, FarEastTone Telecommunications, Fubon Life, China Trust Ventures, and CDIB Capital.
The new fund, which will focus on mobile commerce, as well as startups that create hardware and software for the Internet of Things, is a successor to AppWorks’ first $11 million venture fund, which it raised in May 2012 to invest in early stage companies. Founded five years ago, AppWorks is one of Taiwan’s highest-profile startup accelerator programs and has graduated more than 190 startups.
Founding partner Jamie Lin says that AppWorks’ alumni have raised a total of $150 million at a combined valuation of $400 million so far. AppWorks’ first fund invested in 20 startups that participated in its accelerator program and has used about 80 percent of its capital. Two of its portfolio companies, game developer PubGame and e-commerce company Kuo Brothers, are going public on the Taiwan Stock Exchange later this year.
While its previous fund focused on angel and seed investments, its new $50 million fund will make investments at different steps of growth. For seed-stage companies, the fund will invest between $200,000 to $400,000. Series A companies will receive between $1 million to $3 million, while Series B investments get $5 million to $10 million. Along with investments, AppWorks wants to build a team of experts to help startups with public relations and legal issues as they grow.
“Most accelerators in the U.S. only do seed rounds, whereas a lot of VCs don’t invest in accelerator seed rounds, but wait until companies to graduate to invest,” says Lin. “We think the two world should be vertically integrated because as an accelerator we know the teams best.”
One of the main challenges faced by startups is raising the money to expand into markets beyond Taiwan, which has a population of just 23 million people. Taiwanese companies also face the question of exactly which markets to enter. The U.S. and Europe have geographical and cultural barriers, but China is difficult for any foreign tech company to break into, even an Asian one.
Lin says that many Taiwan startups are now looking at Thailand, Indonesia, Malaysia, and Singapore for growth, and the country has the potential to turn into “the Silicon Valley of Southeast Asia.”
Examples of companies tackling that region include 91Apps, which helps e-commerce companies set up mobile apps; restaurant-booking platform EZTABLE, which operates in Hong Kong, Thailand, Indonesia, and Malaysia; PubGame, whose Thai branch accounts for a significant percentage of its revenue; e-commerce startup uitox; and marketing analytics company Migo.