Battling against tradition, Taiwan's Ministry of Science and Technology are attempting to educate the startups of Taiwan on the benefits of mergers & acquisitions.
Last week, at Taiwan’s premier startup event, Meet Taipei, Taiwan Tech Arena (TTA) played host to the inaugural ‘Global Startup M&A and Corporate Innovation Forum’. Experts were invited from both the U.S. and Israel to present the inherit value of mergers and acquisitions (M&A) and shared their experiences.
In an interview with EE Times Asia, Dr Chiou Chyou-Huey, the Director General of Ministry of Science and Technology’s (MOST) Department of Academia-Industry Collaboration and Science Park Affairs, expressed the need to raise awareness of the options available to the startups of Taiwan.
MOST, the government sponsor behind the startup ecosystem building program TTA, quoted a recent survey named ‘Survey among CEOs in Taiwan 2019’ which was released by KPMG Taiwan. Their findings indicate that 16% of Taiwanese CEOs hope to drive growth through adopting an M&A strategy. While this is up from 6% in 2018, Dr Chiou believes that there is still more that can be done as “startups can leverage support from big companies through either a merger or acquisition and gain from their large resources or even their technological support”.
However, while he is adamant that there are many benefits to M&As, Dr Chiou also highlights the various obstacles that organisations such as MOST need to overcome if they are to entice startups. Neither Mergers, nor Acquisitions are very popular in Taiwan, owing to a strong cultural desire to be their own boss and run their own business. More than just a cultural challenge, Dr Chiou explains that Taiwan’s regulatory environment is not yet mature enough to provide the necessary incentives. Lamenting the lack of role models for startups Dr Chiou said, “if we have some role models, if we have some success stories, it will encourage more founders to accept M&As as an option”.
Having attended CES several times, Dr Chiou is extremely confident when it comes to the technological capability of the startups in Taiwan but feels it’s a lack of exposure on the international stage which has limited their success. Taiwan remains a small market and startups are realising the need to expand their business overseas to find success. MOST has been sending startup delegations to attend exhibitions in Europe and other nations, through these trips they have gained more customers and connected with many investors.
“I don’t want to say that mergers and acquisitions are more important than an IPO, but I want them to think that these options can be considered”, said Dr Chiou. “A founder needs to be educated in how to launch a business, they need to learn how to make money, to learn from failure and learn to change their position. If they can be acquired, then they will learn something new and through all that training they can be an entrepreneur again if they choose”.
The next step for Taiwan is to attract more international companies to become members of TTA. These members can provide their resources and co-work with startups or accelerators. These accelerator programs can be designed to match the needs of companies which is a great way for them to build relationships and can facilitate M&As.