Founded in 2019, Hive Ventures differentiates itself from other venture capital firms by embracing investment + advisory, a business model of investing in early-stage venture capital in startups and providing advisory services for startups. help solve critical customer issues, according to co-founder Yan Lee.
Startups need to solve customer problems to define products
Hive Ventures found that Taiwanese startups specializing in AI, big data, and IoT have competitive advantages internationally. Competitive advantages are attributable to many technology experts with hardware/software know-how cultivated by Taiwan’s ICT supply chain, and furthermore, Taiwan-based startups are more open-minded towards the global market than those based in Japan and South Korea. . Compared to startups based in Southeast Asia, which mainly specialize in software, those based in Taiwan take over the hardware expertise and the entire value chain. Thus, Taiwan-based startups can improve their international competitiveness if they are able to integrate their technological expertise with the strength of ICT hardware manufacturers.
On the other hand, however, the benefits have constrained the business development of these startups, and the investment + advisory model aims to offset the constraint to help them with business development.
The constraint is due to overreliance on technological advantages, equivalent to the concept that technology can overcome everything, and neglect of the key point that solving customer problems is crucial for business development. The technologies used to solve customer problems are not necessarily advanced or deep, but should be systematic and innovative.
With most customers being enterprises, these AI, big data, and IoT startups need to focus B2B marketing on their problem-solving ability instead of relying on their technological advantages. Also, some IoT startups are still hardware-focused and therefore mainly focus their marketing on promoting sales of data capture equipment (such as sensors) instead of data analysis software services.
To fill the startup gap, Hive Ventures consistently provides startups with consulting services on branding, marketing models, talent recruitment and goal setting at various stages of fundraising, offering to enable them to use their technologies in rapid response to customer pain points and quickly understand any deviations from how to build preliminary business models based on their technologies to correct the models as soon as possible.
Venture capital operation in Taiwan unlike Silicon Valley
The familiarity of Silicon Valley-based venture capitalists with methods for assessing startup potential at every stage has become SOP (standard operating procedure). In addition, venture capital investment in Silicon Valley is characterized by rapid flows of sufficient funds, with startups there rapidly progressing from pre-seed stage to seed funding, Series A, B and C.
In comparison, venture capital investment in Taiwan is lower than in Silicon Valley in terms of mobility and amount of funds, and as a result, startups with high tech potential may not progress smoothly through the development process. Fund raising.
Due to the gap in the venture capital ecosystem between Taiwan and Silicon Valley, venture capital firms and accelerators in Taiwan have developed different models of cooperation with startups than those available in Silicon Valley. That’s why Hive Ventures developed the investment + advisory model.
Taiwanese entrepreneurship ecosystem benefits from COVID-19
Although the trade wars between the United States and China and the coronavirus pandemic have had some impact globally, Hive Ventures continues to focus on venture capital investment in startups with technological potential in AI, big data and IoT.
Following the trade wars between the United States and China, Chinese policies and measures regarding AI, software and data protection are causing international concern and concern, which has led to greater international attention. towards Taiwan-based AI startups. Meanwhile, mainly due to Taiwan’s excellent performance in the fight against the pandemic, many international venture capital fund managers and co-founders chose to stay in Taiwan for a long time and thus had more opportunities to understand or even to participate in the ecosystem of entrepreneurship in Taiwan.
Due to the pandemic, overseas entrepreneurship promotion activities such as Demo Day have shifted from physical exhibitions and conventions to online ones, providing Taiwan-based startups with easy access to what companies Venture capitalists and foreign accelerators care about their investment. Also due to the pandemic, many international venture capital funds and fund managers are expected to move to Taiwan, which will allow them to better understand the Taiwanese market and, therefore, introduce more international investors to Taiwan.
Taiwan Government Supports Taiwan’s Entrepreneurship Ecosystem
For Taiwan-based startups to tap into overseas markets, there have been several successful cases in the Japanese market, as Japan places great cultural trust in Taiwan. Besides Trend Micro and Appier listed in Japan, Vpon, Beseye Cloud Security and awoo Intelligence have performed well in the Japanese market so far. However, to tap into the US market, Taiwan-based startups should change the operational mindset from price consideration to value consideration to get more business development opportunities.
For Taiwan-based startups, Southeast Asia, where manufacturing and agriculture are central to economic development, is a market worth tapping into. Many local Southeast Asian companies have good relationships with those based in Taiwan, and more and more Taiwan-based companies are investing in the region, providing opportunities for Taiwan-based startups. In particular, Taiwanese startups specializing in smart manufacturing can solve problems for customers based in Southeast Asia and support Taiwanese companies investing in Southeast Asia to tap into the regional market.
The National Development Fund continues to invest, provide advisory services and subsidize Taiwan-based startups through cooperation with venture capital firms and accelerators, which means the Taiwan government is actively boosting the development of the entrepreneurship ecosystem in Taiwan. Additionally, the Taiwanese government has provided dedicated financial bailouts to local startups affected by the pandemic.
Yan Lee, Founder and Managing Partner of Hive Ventures
(Editor’s note: eades can download “2021 Taiwan Startup Ecosystem Survey” conducted jointly by PwC Taiwan, TIER and DIGITIMES: https://www.pwc.tw/en/publications/taiwan-startup-ecosystem-survey.html)