Research Report Taiwan October 2015

Research Report Taiwan October 2015

RESEARCH OUTLINE Overview of Taiwan Digital Landscape
Entrepreneurial Ecosystem Investment Landscape Others

Entrepreneurial Ecosystem
Overview of Taiwan Digital Landscape Entrepreneurial Ecosystem Others Investment Landscape Overview of Taiwan

COUNTRY PROFILE Taiwan is ranked 4th in Asia for Democracy ratings
It also has traditional expertise in manufacturing and IT industries, with its history as one of Asia’s 4 Tigers General Profile Location: Taiwan is an island 100 mi (161 km) off the Asian mainland in the Pacific Population: 23.3m Labor Force: 58.6% of population; 13.6m Democracy Level: Ranked 35h out of 167 countries, 4th in Asia Major Industries: IT and IC manufacturing, optoelectronics, machinery and machinery tooling, biotechnology, green markets, industrial technology and research, science parks Ethnic Groups: Aborigines (1.7%), Holo (73.3%), Hakka (12%), and Mainlanders (13%) Demographics(age): 0-14 years: 14%, years: 13.4%, years: 47.4%, years: 13.2%, 65 years and over: 12% Urbanization: 75% with a rate or urbanization to be 4% Language: Mandarin Chinese (official); Taiwanese, Min, Hakka, Ami and 10 other Malayan-Polynesian Religions: Buddhist 23%; Taoist 18%; Protestant 2%; Roman Catholic 1%; Confucian 1%; non-religious 48% Literacy rate: 65.5% Economic Statistics GDP: $489.21B, represents 0.79 percent of the world economy GDP per capita: $2,598, ranked 36th in the world GDP growth rate: -1.97% (2015); forecasted to be 1.02% of the world’s total GDP GDP (Purchasing Power Parity): $926.4 billion Discretionary spending of the mass affluent and the rich: $7.1b and $5.7b (Wong, 2007) Inflation: 0.28% Foreign Direct Investment (Inward Flow): $2.8b (2014) Source: heritage.org, knoema.com, populstat.info, tradingeconomics.com, Democracy Index 2014

MACRO OVERVIEW Focusing on their overall index for doing business Asia-Pacific region, Taiwan is ranked 4th, behind Singapore, Hong-Kong and Malaysia Macroeconomic Climate and Investment Policies Taiwan is ranked 19nd out of 189 countries in the world in terms of ease of doing business (Doing Business Report, 2015) New regulations provide preferential tax incentives to foreign professionals employed in Taiwan and eased restrictions on investments with mainland China Deregulation objective is to position Taiwan as an Asia-Pacific Free Trade Center Open foreign investment policies: Allows for 100% ownership in a company by foreigners A minimum of one shareholder is required for business registration in Taiwan if the shareholder is a corporate body IMD 2015 World Competitiveness Ranking; Taiwan at 11th position Macro and Infrastructural Fundamentals The median income of Taiwanese middle class is USD$794.3 per month for 2014, representing a 1.82% increase from 2013 Taiwan has a large, skilled and urbanised labour force, with very good levels of secondary and tertiary education, particularly in science and technology Taiwan has a strong infrastructure of railways, roads and an extensive network of shipping and air freight capacity Trade and investment risks are low in Taiwan owing to the country's open economy, relatively low fiscal and trade barriers and minimal red tape plaguing its bureaucracy Political and Social Factors The Taiwanese students are unhappy with the current education system and wages Two major parties for Taiwan’s 2016 elections have produced female candidates showing increasing openness and pluralism in Taiwan’s politics The unemployment rate is now 3.8% (2015 2Q) The price of oil has fallen more than 50 percent in the past year, leading to lower inflation and higher purchasing power Source: doingbusiness.org, santandertrade.com, imd.org, bmiresearch.com, deloitte, thediplomat Confidential

KEY GOVERNMENT POLICY Head Start Taiwan plans to reposition Taiwan on the world map by rebuilding entrepreneurship in Taiwan Aims to attract international startups and talent to Taiwan and align itself with global trends Head Start Taiwan 3 main strategies of Deregulation, Global Fund Attraction, Cluster Building Deregulation: Align and update regulatory environment with international standard Global Fund Attraction: Attract global venture capital for early stage investment and international connections Cluster Building: Building of physical cluster including co-working spaces, mentoring, professional services with presence of incubators, accelerators and startups for ecosystem synergy Deregulation: Setup Innovation and Entrepreneurship Policy Board in 2014 to resolve integration issues, shed outdated concepts and formulate new laws and regulations Has eased equity structure to be more flexible, liberalized equity crowdfunding – 2nd in Asia to do so Easing restrictions limiting hire of foreign qualified labour to companies with an annual revenue in excess of US$333,778 (NT$10 million) or register import and export value of more than USD$1m (NT$31 m) a year Global Fund Attraction: National Development Council (NDC) to invest USD$83 million (NT$2.6 Billion) through the Head Start Project in four venture funds: 500 Startups, Translink Capital lll, 360ip and Appworks On condition they look actively at investments in Taiwan Cluster Building: Taiwan Startup Stadium serves as an initial implementation Planned to be located in Taipei Expo Park, total land space of 27k square meters 5 minutes drive from highway and 1 minute from MRT Source: bloomberg.com, buzzorange.com, Headstart NDC Confidential Copyright © 2011– 2016 GREE Ventures, Inc. All Rights Reserved.

KEY GOVERNMENT SUPPORT SCHEMES
There have been a recent increase in government support of startups ever since Head Start Taiwan was implemented Most grants have a focus on helping Taiwan startups establish footing in Silicon Valley Grants and Financing: Taipei Municipal Self-Government Ordinance for Industrial Development Grant: Grants for SMEs and startups, including foreign-owned, catered to different growth stages and covers 50% of project expenditure: Brand Establishement - NT $5M Incubation and Growth – NT $3M New Startups – NT $1M Taiwan Silicon Valley Technology Fund: A USD $100M fund that aims to fund Taiwanese startups in Silicon Valley, as well as early stage startups in the Valley Taiwan Innovation and Entrepreneurship Center: Provides financial, management and manufacturing assistance to Taiwan startups in California while pairing them with various local accelerators. Also provides USD $20k grant to subsidize living expenses Business Incubation Schemes: Taiwan Rapid Innovation Prototyping League for Entrepreneurs (TRIPLE): Seeks to attract startups with potential from around the world, in particular Silicon Valley, to Taiwan. Focus on wearables, IoT, advanced manufacturing, medical devices and materials Visas: Foreigners can apply for an entrepreneurial visa lasting up to one year Open to extension of 2 years if business is successful Source: milliondc.com Confidential Copyright © 2011– 2016 GREE Ventures, Inc. All Rights Reserved.

FOREIGN DIRECT INVESTMENT (FDI)
The Ministry of Economic Affairs (MOEA) has set a goal of attracting US$11 billion in foreign investments in 2015 Overview FDI By Industry A foreign company may establish a wholly owned subsidiary in Taiwan, as well as hold shares in local or foreign held companies The Ministry of Economic Affairs (MOEA) has set a goal of attracting USD $11B in foreign investments in 2015 Foreign direct investment in Taiwan surged 48.19% on-year to US$1.24 billion in the first quarter of 2015 Guidelines for direct investment in an existing company There are three stages-application for investment are permission, capital remittance, and application for capital verification, any changes to the directors or supervisors of the company invested in, a change of registration must be applied for within 15 days The time required for the review of investment permission and application for capital verification depends on amount invested by the foreign company: For investment amount less than NT$500m (2 to 4 working days) For an investment amount over NT$500m (5 working days) For an investment amount over NT$1b (14 to 40 working days) Source: asiatoday.com.au, wantchinatimes.com, moeaic.gov.tw, Santandertrade TW FDI

FOREIGN DIRECT INVESTMENT (FDI)
Circumstances which require regulatory approval for Foreign Nationals Prohibited / Regulated Industry Investments Where a foreign national wishes to establish a subsidiary , branch or directly invest in an existing company Where a foreign national wishes to appoint a representative to engage in legal acts for its business in Taiwan Investments in select industries (Right) Prohibited Post delivery Broadcasting Television Regulated (Requires Authority Approval) Power supply Trusts and investments Passenger car rental and leasing Insurance Remittance Regulations Documents of proof such as agreements related to income, expenditure or transaction or approval letters must be submitted for: Remittance by a company or business entity is more than USD$1m Remittance by an organization or an individual is more than US$500k Remittance for direct investment or investment in securities as approved by the competent authority, or a remittance for transactions is conducted within the territory of Taiwan involving goods or services located outside the territory of Taiwan The bank must apply to the Central Bank of Taiwan for its approval prior to making a remittance in cases where: The annual aggregate amount of necessary foreign exchange purchased or sold by a company or business entity exceeds USD$50m, or where the annual aggregate amount of necessary foreign exchange by an organization or an individual exceeds USD$5m Payments exceeding US$100,000 for the payment for construction projects within the territory of Taiwan, performance bond and arbitration costs to be deposited for legal proceedings, relevant payments obtained from self-use immovable property pursuant to laws, and payments obtained in accordance with laws such as inheritance, insurance payments and condolence payments by non-Taiwanese residents Source: bycpa.com

TAXATION AND ACCOUNTING
Taiwan Taxation Corporate tax rate is 17% Threshold for company being subject to taxation is NT $120k Undistributed profits by the end of the year is subject to a 10% surtax No CFC (Controlled Foreign Corporation) rules Taiwan’s R&D tax incentive scheme allows for 15% of R&D expenditure to be claimed as tax credit which is limited to 30% of the income tax payable Gross Business Receipts Tax (GBRT) – F&B (15% to 25%), small business owner (0.1 %or 1%), financial institutions (2%) Value Added Tax (VAT) – Standard (5%), Service related to exports (0%) Taiwan’s Accounting Standards The International Financial Reporting Standards (IFRS) is adopted for public companies The IFRS is not applicable for SMEs; instead they can use national standards implemented by the Accounting Research and Development Foundation (ARDF) Source: ardf.org.tw

Digital Landscape Overview of Taiwan Digital Landscape Entrepreneurial Ecosystem Others Investment Landscape

DIGITAL LANDSCAPE SNAPSHOT
Social Media penetration rates in Taiwan (71%) are behind only Singapore (91%), even though Taiwan has close internet penetration rates as Japan and South Korea Source: Central Intelligence Agency 2015, World Bank 2014, We Are Social SG 2015 Confidential Copyright © 2004 – 2012 GREE Ventures, Inc. All Rights Reserved.

INTERNET DEMOGRAPHICS
Taiwan has one of the top internet penetration rates in APAC, at 80% Global Average (42%) Millions of users National internet penetration figures Key Takeaways Small internet user base as compared to neighboring countries Internet penetration rates relatively high within the APAC region, signaling little room left for growth Source: We Are Social SG, Central Intelligence Agency 2015, Internet Live Stats

MOBILE USAGE Taiwan users spend a large percentage of time on mobile, at 62% as compared to time spent on desktop Total number of mobile subscriptions Mobile subscriptions as a percentage of the total population Percentage of mobile connections that are pre-paid Percentage of mobile connections that are post-paid Percentage of mobile connections that are broadband (3G&4G) Key Takeaways Most mobile subscribers are post paid users High levels of mobile connectivity (85%) About 27% shop via mobile (Jan 2015) 32.6M 139% 14% 86% 85% Global Average (98%) Active 3G?4G mobile connection compared to the total population Source: We Are Social SG 2015

Time spent on Social Media, Mar 2015
SOCIAL MEDIA USAGE Taiwan has the second highest social media use in APAC (71%), well above the APAC average (27%) Total number of active social media users Active social users as a percentage of the total population Total number of active social users accessing via mobile Active account on the top social network in each country, compared to population Active mobile social users as a percentage of the total population 16.6M 71% 14.6M 62% Social Network Messenger/Chat App/VOIP Time spent on Social Media, Mar 2015 Taiwan’s time spent on social media is close to the lowest levels within the APAC region, slightly above Singapore Source: We Are Social SG

E-Commerce Overview

ECOMMERCE LANDSCAPE The ecommerce market in Taiwan is relatively established compared to neighbors, with high growth rates User Average Annual Spend, 2014 Taiwan has relatively high order values, trailing behind only Hong Kong, which sees high demand for luxury goods Market Size (millions) vs Market Growth (%) Taiwan has the highest market growth as compared to its neighbours, however, though market size is far outstripped by Japan, it is significantly larger than Hong Kong and Singapore % of population who bought something online 2nd highest penetration rates for ecommerce shopping compared to other countries in APAC Source: Hong Kong Country Report, We Are Social, Ekos Ecommerce Overview

ECOMMERCE LANDSCAPE Shopping online for convenience and price are major factors influencing Taiwanese online shopping behavior While most are open to buying overseas products, they prefer to do it through a local dealer Top online shopping categories Fashion remains the top purchase category for Taiwanese. FMCG has a relatively high online shopping penetration, at 32% Foreign purchase While most Taiwanese are open to purchasing foreign products, they prefer to do it through a local dealer. It is thus important to be localized, showing domains with .tw Source: specommerce.com

Popular Ecommerce Sites Ranked in Alexa
ECOMMERCE LANDSCAPE Popular Ecommerce Sites Ranked in Alexa Website Focus Alexa Ranking UDN Broad 9 Alibaba 162 Momoshop 15 Lativ Fashion 170 Ruten 19 Ebay 183 PCHome IT/Home 21 Payeasy 188 Taobao 25 MamiBuy Motherhood 192 Books.com Books 42 Momomall 194 Amazon 53 Eyescream 245 Go Happy 63 i-house Home 434 Rakuten 84 Savesafe Broad (Budget) 520 U-mall 115 Lovfee 1012 Source: specommerce.com, alexa.com

Common forms of Cash payments
PAYMENT METHODS Cash remains the popular way to pay for online transactions, facilitated with platforms like iBon and iCash Common forms of Cash payments Cash on delivery system (COD) Available at every 7-11 store in Taiwan A prepaid card issued by 7-11 in Taiwan, Has point accumulation system and benefits like cash rebate to promote spending. Majority of Taiwanese consumers still prefer to use cash as a form of payment, particularly with mobile purchases Credit cards are the second most preferred form of payment, with 39 percent of respondents using one payment card on a regular basis, and 29 percent regularly using more than three cards. 12 percent of respondents say they already use electronic payments as the second most preferred form of daily spending payment 32 percent say they would not use their cards on either a smartphone or tablet Source:techinasia.com, ecomzen.com, Nielsen Report 2014

OVERALL INFRASTRUCTURE
Taiwan has many deeply entrenched players which make it difficult for new emerging players General lack of independent ecommerce analytic providers Aspiring entrepreneurs and merchants required to onboard deeply entrenched marketplaces (Momo, UDN, Taobao) to gain access to analytics Incumbent marketplaces are failing to keep up with progressive market trends Deep integration of convenience stores as last mile fulfilment Merchants can also place virtual items in convenience stalls for consumers to browse Most merchants able to deliver within 24 hours, PCHome guarantees 6 hour deliveries Many integrated ways for consumers to pay by cash, the preferred payment method Convenience stores have iBon and iCash machines present Consumers pay by inputting code, generating a receipt for payment at coutner Online payment options readily available: Paypal, Alipay, Tenpay General lack of specialized vertical providers Inhibited by lack of support, as mentioned in analytics Most marketplaces offer a broad variety from varying merchants, but lack curation and quality Most vertically specialized businesses source from China, which consumers in Taiwan have ready access to through Taobao Most established players have broad offerings across multiple verticals, though some have certain specializations with multiple sidelines Almost every product category in Taiwan can be bought online Some large western brands can be bought online through .tw website extensions

Mobile Overview

MOBILE LANDSCAPE Majority of Taiwan smartphone users use the Android platform (76%) compared to others (24%) Taiwan Smartphone Market Share by Operating System (2013) % of population using mobile during specific activities There might be some discrepancies in PC internet usage as 66% of Indonesian’s use PC internet at internet cafes Android is the operating system of choice for Taiwan’s smartphone owners while iOS commands a share of 13%. Majority of Others (11%) are Windows phones Most use their mobile during ‘idle’ periods, such as waiting (76%), lying in bed (59%) Small minority use their mobile in situations with others present (11% & 20%) Source: Taiwan Media Landscape, GlobalWebIndex Smartphone OS

% of population who bought through mobile Mobile Activity Breakdown
MOBILE LANDSCAPE Mobile commerce purchase for Taiwanese is high, 52% of online purchases go through mobile This is even though only 8% of time on mobile is spent on shopping, indicating a very high reliance on mobile % of population who bought through mobile Mobile Activity Breakdown 27% of Taiwanese population bought through mobile. This constitutes about 52% of the population who purchase products online This is the 2nd highest in the region, behind only South Korea Taiwanese mobile users spend majority of their time on social media and entertainment (21% ea) Shopping at only 8%, despite mobile purchases constituting almost 52% of online purchases Source: slideshare.net

MAJOR MOBILE PLAYERS There is a strong application development scene in Taiwan, supported by user receptivity to a variety of different applications Company Business Model Performance Utility WhosCall Instant caller ID identification Block unwanted calls and SMS’s Database with over 700 million phone numbers 50M+ installs (Android) 306k reviews Average rating is 4.4 Cubie Chat app, allows group chats of 100 pax Allows for graphic drawings in a chat 12M downloads USD 1.3M Series A, USD 1.1M Seed Kdan Mobile Multiple productivity app suites Cloud features that allows syncing across multiple OS 30M downloads 60% of users from Europe and US Alfred Camera application allowing for real time home monitoring Reuses old smartphones, syncs to current smartphone 18,820 ratings, 82% 4* above 5M downloads POP App prototyping platform Transforms paper drawings to functional prototypes USD 700k Seed Launched in 2012, first of its kind Every8D Enterprise chat app Share files, allocate tasks and other work related functions 200k users, 2000 businesses 20M valuation 91App Storefront as a service, Shopify in App form 1,000 paying vendors KKBox Music streaming service 10M users, 2M paying Cheetah Mobile Publishes mobile apps to optimize phone performance 494M MAU, #1 on Google Play Tools Source: techinasia.com, slideshare.net, appannie.com

MAJOR MOBILE PLAYERS There is a strong smartphone gaming culture in Taiwan, with many mobile game development companies rolling out new games catered to the local market frequently Company Business Model Performance Lifestyle iCook Taiwan's largest recipe website Search by keyword, name, ingredients, cuisine, 5M+ installs (Android) 39k review Average rating is 4.6 PicCollage Picture collage app 35M downloads, 12M MAU Raised USD $2.3M EZTable Restaurant booking app 900 restaurant partners, USD 15M sales Gaming Cytus Mobile music game 180 songs and 360 variations, including many from famous composers around the world 10M+ installs (Android) 413k reviews Average rating is 4.7 Ultimate Robot Wars Mobile robot shooter game 500k installs (Android) 129 reviews Average rating 3.4 Shootout Encounter Mobile multiplayer role playing game 1.5k reviews Average raing 4.1 Source: techinasia.com, slideshare.net, appannie.com

MAJOR MOBILE PLAYERS A large market share of mobile application downloads is contributed by mobile games Source: techinasia.com

Overview of Taiwan Digital Landscape Entrepreneurial Ecosystem Others Investment Landscape

OVERVIEW – STARTUP ECOSYSTEM
The local VC industry pumps close to $100 million into the ecosystem each year, funding 30 to 50 startups across seed stage to pre-IPO stage Source: startupnations.org

BEHAVIOR OF STARTUPS Most startups in Taiwan focus on IOT, Ecommerce, or Application development for mobile IOT hardware have support from various makerspaces and proximity to local manufacturing facilities Ecommerce startups have established infrastructure to begin operations, lowering startup costs Customer Target Startups in Taiwan target the Taiwanese highly mobile centric behavior, with many developing applications and mobile games. Ecommerce is also highly entrenched in Taiwanese want for convenience Most acquisition strategies are mobile based and capitalize on Taiwanese price sensitivity Value Proposition Talent is relatively cheap in Taiwan, allowing for cheap developers and engineers to be hired for a fraction of the price as compared to Silicon Valley Established support for the hardware and IoT space with availability of many makerspaces for rapid prototyping Ecommerce companies have a very established base of logistical framework with high levels of partnership receptivity with various convenience stores like 7-Eleven Established payment infrastructure, with iBon and Icash, as well as high internet connectivity Business Development Strategies Most startups target to join accelerators in Taiwan with the intention to join an overseas accelerator for overseas expansion Traditional strengths in manufacturing also point to many hardware and IOT startups that aim to break into the US market Ecommerce companies set out to establish partnerships with highly receptive key industry players Cost Structure Cost for Ecommerce is significantly reduced, with established logistical structures and various marketplaces Labor is cheap with talent widely available as many are no longer willing to work for dying larger corporations Hardware have close proximity with manufacturing hubs locally and with neighboring China

INCUBATORS & ACCELERATORS
While there is not a large number of incubators and accelerators, many are very established with years of operations, with new comers CoinX and South Star recently launched Incubator Location Description Key Portfolio Garage+ Taipei 3 month program, access to mentors USD $25-100k funding, equity free Access to hardware companies and demo day Codementor Cloudeep Fiiser Startup Stadium Accelerator bootcamp that prepares startups to apply to an accelerator 3 weeks program, incentive of USD $20k to those accepted by overseas accelerators Accelerator Location Description Key Portfolio Appworks Taipei Focus on mobile commerce, IoT software & hardware Has inhouse team for legal and PR, mentors Invests in multiple stages for their batches PubGame Kuo Brothers 91Apps EZTable CYIA Chong Yuan University Innovation Accelerator (CYIA) N/A OrangeFab Asia Startups will have a three-month mentorship and the possibility to explore business collaboration with Orange group Backed by a French Telco Absolute TechDocceo Jrsys International PowerWow Tech 500 Startups Accelerator held in Sillicon Valley Invested in by Taiwan Gov Cubie PicCollage South Star Xelerator 6 month period, mentorship and working space Has Demo day - CoinX Silicon Valley Catered to Asian startups penetrating the US For late stage startups, mentorship towards Exit Source: technode.com, crunchbase.com, techinasia.com, thebridge.jp, iiinno.hackpad.com

CO-WORKING SPACES Co-working spaces are mostly concentrated in Taipei, though many more are appearing in cities like Tainan and Taichung, with upcoming projects in cities like Kaohsiung Accelerator Location Description Makerspace? Changee Taipei Operates multiple spaces Provides inhouse legal, accounting and creative services at subsidized charge Y FutureWard Makerspace and Coworking space Provides digital fabrication, woodworks, metalworks, etc Maker Bar Runs workshops and courses Provides digital fabrication and other workshop tools Taipei Hackerspace Workshop only Provides various workshop tools for electronics to 3D printing Innosquare New Taipei Has basic workshop facilities, business admin services Organizes mentoring and sharing sessions Good Work Taichung Has workshop facilities, co working and event spaces Inhouse barista and cafe BigO Tainan Co-working space and event spaces N Hanyang Co-working space Provides legal and business admin services CLBC Provides events space and virtual office space as well DIT Startup Provides co-working space and organizes events Also has its own crowdfunding platform and fund for startups

Investment Landscape Overview of Taiwan Digital Landscape Entrepreneurial Ecosystem Others Investment Landscape

INVESTMENTS IN TAIWAN The amount of VC deals in Taiwan have remained relatively stable in the past 2 years A decrease in Q3 15 could be due to a spike in deal numbers in Q2 15 Source: CBInsights

INVESTMENT ROUND SIZES
While there has been consistent growth in early stage deals, later stage deals have not seen similar growth Majority of investment rounds are in the early stage, with deal sizes ranging from 0-5M in size, most deals are at 10M and below There are no investments beyond Series C for the past 5 years 20% of deals are at Series B or later Source: CBInsights

ANGEL INVESTMENT LANDSCAPE
Angels in Taiwan consist mostly of entrepreneurs with exits or individuals with links to larger VC firms Angels Description Key Portfolio David Yen Worked at United Real Estate Management KDH Design Matt Cheng Founding partner of Cherubic Ventures Pinkoi Tai-Hung Wu Co-founder of Vocinno Bluesmart, Cozy, Ivee, Localize William Bao Bean Partner SOSV & MD Chinaccelerator Casee, ECitySky, Gamera Networks, Vericant Jamie C. Lin Founding partner at AppWorks Writepath, EZTable Frank Wu Active angel investor in Taipei looking to invest into tech companies that are in the internet / consumer internet sector Breeze, Educents, Kiwi Crate, Loom, VetPronto Lin Ming-Hsiung Chairman of PxMart iChef Jackie Cheng Cofounder GoGoLook Writepath Paul Lin Chairman of Sennao 91App Jan Hung Tze Founder of PCHome Taipei Angels National Taiwan University Angels Network of university alumni Cher Wang CEO of HTC Gogoro Brian Yang Co-founder of funP and Cacafly Whatsthenumber Yushan Ventures Local Angel firm investing in Greater China and US Focus on Travel, Media and Entertainment, Mobile Lucent Sky, Roam & Wander, Flirq, Ming-Zhe Ou Former GM of Lenovo Taiwan iFit Source: angel.co

LOCAL INVESTORS CORPORATE INVESTORS VC/Corp Description
Fund Size (USD M) Key Portfolio in TW TMI Ventures Joint fund with ITRI (TW Gov), WI Harper Group, Innovation Works Focus is on early stage TMT and hardware ticket size Codementor, HWTrek, RE.MU, CitieSocial, Driving Curve KAMIA Fund focuses on Greater China region, or global companies expanding into the region Industries include Ecommerce, Healthcare, Edtech, Enterprise 0.1-1M Ticket size FRM, RE.MU, Roam & Wander, CitieSocial, Ardic Instruments AppWorks Accelerator and VC Invests only in Taiwanese startups Funds raised from strategic MNCs and Gov 50 Bounty Hunter, Sentri, Airsig, Fandora, EZTable, Migo Cherubic Ventures Focus on early stage startups in SV, Greater China and SEA - Buyble, H2, iFit, Ipevo, LiveHouse, 91App, Pinkoi, Trigger Trinity Investment Corporation Venture Capital arm of Institute for Information Industry Invests only in early stage Taiwan startups Gogolook, tixCraft, Servtech Pinehurst Advisors Early stage angel/seed fund Focus on digital media, mobile and commerce Goodlife, Writepath, Viscovery, Cubie, East District CORPORATE INVESTORS Corp Description Key Portfolio in TW Foxconn Taiwanese electronics manufacturing company, wants to diversify from manufacturing Focus mostly in India, invests off balance sheets or subsidiaries AirSig, Shengyi Keji MediaTek Taiwanese chipset manufacturer Has AUM of USD 300M (Separate fund) EZTable, Adonit UMC Semiconductor manufacturer Has AUM of USD 800M (Separate fund) EZTable, Appier Source: Crunchbase, TechInAsia, HackPad,

INTERNATIONAL INVESTORS
Despite high levels of startup activity, there are little International firms investing directly into Taiwan startups VC Description AUM (USD M) Key Portfolio in TW 500 Startups Focuses on early stage startups Rapid expansion into Asia and Middle East markets 150 Bounty Hunter, Codementor, Alfred Sequoia Capital Greater China Invests in early stage startups Fund mostly focuses on China but counts Taiwan as well Highly established firm with worldwide connections 1000 Appier Translink Capital The NDC will match 30 percent of Translink Capital III’s upcoming fund for Taiwan - Golden Gate Ventures Focus is on SEA, but invests in Taiwan and Hong Kong as well 50 POPApp, Koalachat CyberAgent Focus on China and Japan iCook, iPeen, Fashion Guide, iPart Infinity Ventures Focuses on Japan and Greater China region Invests in growth stage companies 300 Pinkoi Zpark Capital Focus is on Seed-Series B startups POPApp, Alfred, Viling Ventures Edtech focused venture fund from Japan Early stage focus 0.1 ticket size QLL Coent Ventures Focus on Seed and Early stage funding 10 Bdash Ventures Focuses on Seed and early stage funding in Japan and Asia WI Harper Group Focus on tech, cleantech and healthcare Invests in early stage startups in Greater China and US 180 Roam and Wander, HWTrek Source: eetimes.com,

EXITS Despite high levels of early stage startup activity, very few make it into overseas expansion Even fewer are acquired or IPO, with exit amounts relatively low Company About Total Funding (USD M) Acquired By Date Exit Valuation KKBox Spotify of Asia KDDI acquires majority stake (76%) KDDI Dec 2010 18 Armorize Software security scanning and cloud-based antimalware technology Undisclosed Proofpoint Aug 2013 25 Hiiir Provides mobile application services Far Eastone Jul 2013 3.34 GogoLook Call blocking service Naver Dec 2013 10 Storysense Computing Artificial intelligence April 2015 Kuo Brothers Ecommerce group of companies IPO Jul 2015 StorySense Makers of Whatsmynumber, their only app - DianHuaBang Apr 2015 GlossyBox Beauty box subscription service VanityTrove Feb 2013

RECENT DEALS (1/2) Company About Recently funded by Date
Amount (USD M) Round Pinkoi Asia’s Etsy, Designer marketplace Sequoia India, GMO Venture Oct 2015 9 Series B Codementor Marketplace to connect coding mentor to student 500 Startups, Techstars Aug 2015 1.2 Seed Pal+ (fka Cubie) Chat app Pivot to game oriented social network FunP, Asiasoft, Expert Idea Ltd Jun 2015 1.3 Series A Gorilla Technology Video Big Data and Analytics technology Telstra Ventures Undisclosed Series C HWTrek Hardware matchmaking platform WI Harper, JD, Global Brain, Legend Star, ITIC 4 Shengyi Keji Provides location-based services and solutions for use in ads, local lifestyle businesses, etc Foxconn Technology Group Apr 2015 Walkie Ticket Ticket vending for concerts and events Viscovery Image recognition tech for information Mar 2015 5 Every8D Every8D originated as an app studio that counted local governments Joinsoon Electronics 4.5 91app A Taiwan-based startup that builds customized apps for brands and retailers CID Group, 91Capital, Appworks, Jan Hung Tze, Paul Lin ACT Genomics A cancer molecular information service Feb 2015 8 Brandkoop Domain language analysis Jan 2015 1

RECENT DEALS (2/2) Company About Recently funded by Date
Amount (USD M) Round LiveHouse Live media streaming website Cherubic Ventures, Gamania Jan 2015 1.3 Series A EZTABLE Taiwan-based restaurant reservation service MediaTek, UMC 5 Series B Trigger Social media app where users can upvote Cherubic Ventures 2015 Undisclosed Seed iFit Fitness community portal Cherubic Ventures, Yuan-Jin Capital, Sino Strategy, Alan Chien, Ming-Zhe Ou Dec 2014 3 QLL Specialized in developing language learning apps Bdash, Pinehurst, Viling Ventures, Coent Ventures Nov 2014 0.45 Gogoro Smart scooters Cher Wang Oct 2014 100 Fandora Marketplace for artists Appworks, UDN, NineYi Sep 2014 0.7 Zillians Cat facial recognition IoT Kickstarter Aug 2014 0.24 Angel Kronosight IOT for security and environment monitoring Jul 2014 0.4 iChef POS for restaurants Lin Ming-Hsiung 1.5 Appier Helps clients optimize advertising ROI by delivering the right ad to the right person Sequoia Capital Jun 2014 6 Roam & Wander Children’s toys combining IoT and games KAMIA WritePath Online help for document editing Bdash, Pinehurst Advisors, Jamie Lin 0.5 AirSig Phone security technology using signatures Foxconn Mar 2014 2

Others Overview of Taiwan Digital Landscape Entrepreneurial Ecosystem Others Investment Landscape

Events HotList (1/2) There is a wide amount of events in Taipei, with many internal conferences and exhibitions to promote the scene A good amount of events are catered specifically to hardware and gives access to manufacturers and other strategic individuals in China Event Location Organizer About Startup Weekend Taipei Taipei Yseed Weekend ideation workshop Startup Grind Taiwan Startup Grind Speaker event with invited notable guests from the startup scene Seedstars Taipei Seedstars One of a series of pitching competitions for emerging markets Hwtrek Asia Tour Hwtrek Small selected group of participants get a chance to meet with hardware experts and tour factories in China Meet Taipei Conference & Neo Star Demo Show Business Next Features 2 stages, 4 exhibition areas, 10 entrepreneur villages, and 200 startups exhibiting their hardware Android Taipei Chocolabs Android Taipei is the leading group for Android developers in Taipei and the event is to give presentations, share ideas, and demo apps Hardware Acceleration Program Logistica Asia Professional consultation and project management services for promising startups with hardware products in the mobile internet/app space. MOSA Local startup conference consisting of workshops and international speakers Baustein Central 3D printing and hardware focused series of workshops Mobile Monday Networking event for sharing amongst mobile stakeholders

Events HotList (2/2) Event Location Organizer About
APEC Global Challenge Taipei Taiwan Institute of Economic Research Yearly global pitch battle to global investors and accelerators Past successes include Gogolook and AirSig RocktheMic Startup Stadium Pitch night for startups T100 Hardware Talks Monthly talks with guest speakers and streams online IDEAS Show Taiwan Institute for Information Industry Yearly exhibition session for startups, providing networking, marketing and demo opportunities Also has speakers and workshops Cross Point Series of various talks and seminars with different themes organized regularly Startup Talk Entrepreneur+ Regular guest invites of speakers to address attendees Alpha Camp Startup bootcamp for participants to learn basics of startups

Interesting Deals There are many interesting developments in the hardware and manufacturing space Some are appearing to venture into VR/AR Company Description Location Current Investors MaiCoin Bitcoin exchange for Taiwanese currency Taiwan Pinehurst Advisors Writepath Marketplace for online document editing Bdash, Pinehurst Advisors + Angels Codementor Coding marketplace with experienced silicon valley founder 500 Startups, Techstars iFit Leading community portal for fitness Going into ecommerce for fitness to monetize Cherubic Ventures, Sino Strategy Group, Yuan-jin Capital and Angels QLL Language learning app Bdash, Pinehurst, Viling Ventures, Coent Ventures Fandora Marketplace for artist, reports strong traction Appworks, UDN, Nineyi Staging Designs AR for interior design, stealth mode - iStaging AR for interior design Absolute Tech WiFi/3G Amplification technologies Docceo IoT + Automation of hotel processes JrSys QR Code payment systems PowerWow Wireless charging for all devices Traiwan Enterprise hotel channel management software Appworks More deals can be found here:

Recommended Strategies
Leverage on Taiwan’s established ecosystem of events and early stage startups to secure good deal flow Good mix of startups in verticals that are of interest to GREE: IoT, Ecommerce Aggressive Actively include Taiwan as a region in fund mandate Make presence known by attending various accelerator demo days and speaking events Develop relationships with keystone individuals and players in the ecosystem such as Jamie Lin and Startup Stadium Emphasize GREE’s ability to help in scaling the business into Japan and the SEA region Few international venture firms present in Taiwan for Series A and above, presenting a good chance to establish a early reputation Passive Invest in deals expanding to SE-Asia and Japan as a market Leverage existing SE Asia network Attend larger scale events such as MOSA to find startups ready to expand However, most startups expanding into other markets might be too late stage for GREE or may choose to expand into China/US instead

Recommended Strategies
Recommended tactics for entering into Taiwan Lack of Investors Most VCs in Taiwan can only fund startups till Series A and not above that Even Series A rounds tend to be relatively small Compete by showing GREE’s expertise in one of Taiwan’s leading niches: Ecommerce and our ability to help with follow-on funding Geographical Expansion Show scale of market in SEA and Japan that GREE can help startups expand to by providing connections and knowledge of the local culture Building Connections Tap into Engineering and Computer Science schools for early-stage startups and startup talent Build relationships with key figures that serve as cornerstones for the ecosystem such as Jamie Lin and Startup Stadium Build relations with the various accelerators, most startups of note enter these programs as a stepping stone Build relations with various government bodies facilitating the startup ecosystem, such as Innovation and Entrepreneurship Policy Board, Taiwan Innovation and Entrepreneurship Center (TIEC) and attend events they organize Leverage on existing investor connections, especially 500 Startups as they seem to be relatively active in the country, with their specialized student run fund 500Rookies Hot areas for investment Hardware / IoT Ecommerce

THE END

CULTURAL FIT – HOFFSTEDE COMPARISON
Specifically Individualism and Masculinity in Taiwanese culture differs largely from Japanese culture This shows that Taiwanese people prefer to progress as a group and are less authoritative or self-motivated Taiwanese workers may require more instruction and guidance Power Distance: A higher number implies people accept a hierarchical order and need no further justification Individualism: A higher number implies individuals are expected to take care of only themselves and immediate families Masculinity: A higher number implies preference in society for achievement, assertiveness and material rewards for success Uncertainty Avoidance: A higher number implies rigid codes of belief and intolerance of unorthodox behavior and ideas Long Term Orientation: A higher number implies encouragement of efforts as a way to prepare for the future Indulgence: A higher number implies relative gratification of natural human drives related to enjoying life and having fun Source: Hoffstede Centre

Research Report Taiwan October 2015

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Research Report Taiwan October 2015

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