Taipei has been workign towards becoming a smart city based on three core concepts: government as a platform, city as a living laboratory, and innovation is the DNA of development, according to mayor Ko Wen-je.Innovative applications are essential to promoting smart cities, and city governments, due to less understanding than industry players, should function as a platform to provide opportunities and experiment sites for firms to develop and commercialize smart city solutions, Ko said during a recent interview by Digitimes.Taipei boasts a complete ICT (information and communication technology) infrastructure, well-developed commercial and ICT supply chains, excellent human resources - conditions that are ideal for developing smart city solutions, Ko said. Taipei, as the capital of the country, aims to play a leading role in promoting smart cities and a hub connecting international resources.Failures allowable, professional knowledge respectedKo noted that many innovations have failed to achieve their final goals, and therefore smart city developments must be supported by an environment where failures are allowed and professional knowledge is respected, which is necessary to encourage government employees to place their priority on "working smart" rather than "working hard."China, Singapore, Japan and South Korea are keen to create innovative environments, Ko said government restrictions should be kept at minimal levels.In terms of professional knowledge, the city will make efforts to educate its officials on science and technology, letting them take classes on the latest development of sciences and technologies such as AI (artificial intelligence), blockchain, big data and others in a bid to realize digital administration.To help the private sector commercialize in-house-developed solutions, the city provides hardware and software resources, including consulting, counseling and incubation services, financial support and international linkage, for startup teams and businesses, Ko said.Taipei as living labThe development of smart cities cannot rely only on efforts by the public sector alone but instead shound depend on an ecosystem combining the efforts of the public and private sectors, including those by academic and research organizations, as well as industrial sectors, Ko said. Taipei aims to play a pilot role providing public resources, such as space for experiments, as a form of collaboration with the private sector to make the city a large living lab where innovators can undertake POC (proof of concept).There are over 120 ongoing POC projects in Taipei and the number is increasing, he said. For example, there are two smart restrooms in a park featuring automatic detection of toilet paper and soap consumption, ammonia density, and IoT-based real-time notification of management personnel for replenishing the materials and cleaning. The city's Feitsui Reservoir with water area of 1,452 hectares is another POC project: its administration has set up a smart management system using LoRa IoT technology. Other POC projects include smart security surveillance such as tracking of persons and vehicles as well as virtual electronic fences to enable security management.Smart public housingThere are 127 public housing development projects with a total of 19,923 rental units in the city, with some having been completed and some others undr construction or at the planning stage. The city government aims to experiment smart city solutions in these projects, including installation of smart power, water and natural gas meters and providing smart energy-saving systems as well as smart community security and parking services. The city government is willing to increase the cost of the public housinng projects by 3-5% in order to promote smart city solutions, Ko said.Mobility as a serviceIn terms of transportation services, the city government is promoting "mobility as a service" and smart transportation by integrating different transportation systems and services, and encouraging use of mobile e-payment in a bid to reach seamless and door-to-door mobility. For shared transport, there are over 13,000 U-bike rental bicycles available for sharing at 400 roadside stations, 1,000 U-motor rental electric scooters, and 200 power charging piles at 80 public parking lots. In addition, the city government plans to offer U-car rental electric cars for shared use.Smart medical care, e-payment and educationThe city government will cooperate with enterprises to develop smart medical care solutions for use in clinics, home care and hospital administration, with seven municipal hospitals with more than 3,500 wards in total as experiment sites.Taipei in 2017 launched pay.taipei, a platform for citizens to make online inquiries about utility fees, parking and medical services provided by municipal hospitals, and make e-payment via cooperation.Taipei will invest NT$1.2 billion (US$39.3 million) to promote smart education, mainly digitized teaching and administration, at its elementary and junior high schools in 2018 and 2019.Taipei mayor Ko Wen-jePhoto: Shihmin Fu, Digitimes, October 2018

Following Sesto Robotics' debut at Semicon Taiwan in 2016 and return to the show in 2017, the Singapore-based automated guided vehicle (AGV) and intelligent mobile robot (IMR) developer was again at the premier event of Taiwan's semiconductor and microelectronics manufacturing industries in 2018, showcasing its new S200 with 7-axis Robot Arm IMR that is equipped with the company's newly developed features and innovations.Sesto CEO Michael Leong noted that in addition to the developments of technologies and robot systems, Sesto has also been devoted lots of efforts to the market's operation over the past 12 months. Sesto has been working closely with its clients to implement its IMR solutions into the clients' factories and during the process the company was able to receive many feedbacks from them, helping Sesto to further refine its products.Sesto's S200 with 7-axis Robot Arm IMR is designed for the transportation of semiconductor products especially silicon wafers and compared to the company's IMR showcased at Semicon Taiwan 2017, it features a much smaller size, but more carriage volumes for better efficiency.As for the machine's robotic arm, since Sesto's expertise mainly lies in its automated guiding vehicle controlling (AGVC) system, the company is mainly cooperating with outside partners for the related developments and is spending most of its effort and resources in the development and improvement of the IMR's guiding system and technologies.Sesto has already formed collaborations with several Japan- and Europe-based major robotic arm developers to make the S200 base compatible with their arms. However, Leong said that the default equipment of the S200 with 7-axis Robot Arm is by far the best setup that Sesto has come up with for the semiconductor industry after numerous testing. This is because the robotic arm from the default equipment has a loading capacity that is most suitable for semiconductor manufacturers.Compared to competitors in the robot industry, Leong said that Sesto's advantage is its ability to provide full solutions to customers. For an automation equipment provider, only having the ability to design and craft machines is not sufficient to cope with the industry's fierce competition. The ability to provide a complete set of robotic automation solution is the key to maintain competitiveness and Sesto is not only able to do that with flexibility, the solutions that the company offers also meet demand of Industry 4.0.To make automation equipment that can be easily integrated, chaining up different platform's hardware and software and connecting them up to coordinate with each other is essential and it is an area where Sesto has its niche.The concept of Industry 4.0 is mainly about system of system, meaning that a company needs to have its products link with those from others to form an even bigger system chain. This is a large advancement from the concept of the Industry 3.0 era, when most of the systems are designed to be operated independently.As for Sesto's upcoming plans or new products, Leong said that the company has been making new improvements to its products based on clients' feedbacks and will gradually release new IMRs featuring smarter guiding technologies and capability of handling more tasks.In addition to the semiconductor, Sesto will also begin tapping into new industries in 2019 as the company has already built up many case studies and prepared various of solutions to offer to customers, said Leong, adding that he believes the experience Sesto has learned from the semiconductor industry can also be applied to other manufacturing applications.Commenting on the robot market's status in 2018, Leong said the market is still on the rise and demand for robot products is increasing every year. This trend has to do with increasing demand from consumers worldwide for replacing their IT devices such as smartphones and wearables every year and it has already grown to a scale that requires a large manufacturing workforce to satisfy.With younger-generation workers showing less interest to work in the traditional manual labor production line, upgrading facilities to utilize robots for production has become an alternative way for IT product manufactures to maintain their output.As a result, the robot industry has seen rising demand for robotic devices from the manufacturing industries every year and because the trend is likely to continue, demand for robot products will only grow stronger, providing large business opportunities to players of the industry.As for Sesto's business goal for 2018, expanding the promotions of its IMRs is one of the key directions. For the long-term, Sesto is looking to transform its IMRs to perform more intelligent tasks such as becoming busboys of a restaurant to assist human workers to carry around meals or dirty plates, and help people in daily life.Currently, Sesto's main markets are China and Taiwan, but over the past 12 months, the company has received many inquiries from companies in Europe, Leong noted. However, Sesto will continue placing its attention on serving its clients in China and Taiwan given that a major portion of its products' demand is mainly coming from these markets.Sesto CEO Michael Leong and S200 with 7-axis Robot Arm IMRPhoto: Joseph Tsai, Digitimes, September 2018

Through attending various commercial activities hosted by the World Information Technology and Services Alliances (WITSA), Taiwan information software and hardware firms can more easily tap global business opportunities, according to Yvonne Chiu, chairperson of both WITSA and the Information Service Industry Association of the ROC (CISA).In an interview conducted in Hanoi, Vietnam by Digitimes, Chiu said WITSA is an organization with global visions, and has a total of 83 member states, with all its activities highly supported by host countries.Chiu called for Taiwan makers of information hardware products, particularly industrial PCs, to join her association first and then actively attend commercial activities organized by WITSA in various countries to directly explore business opportunities though cooperation with integrators of software and hardware systems. At the ASOCIO Smart City Forum 2018 recently held in Hanoi, Chiu had the opportunity to discuss various smart city business opportunities with over 600 representatives from 10 member states, highlighting Taiwan's various smart city application solutions, especially those associated with mass rapid transit systems (MRT).Chiu said that Taiwan's MRT systems, long renowned for their clean in-train space and punctual services, managed to provide 4K live TV broadcast of the 2017 Summer Universiade held in August in Taipei. This can serve as a good reference for various countries in hosting large-size sports events. In addition, the electronic payment and fund transfer systems via MRT EasyCard now under promotion by Taipei City Government, as well as how to address related regulatory and financial issues can also serve as paragon models for other countries.Interest in working with Taiwan in ICT developmentChiu managed to arrange Colley Hwang, president of Digitimes, to give a talk at Vietnam's Ministry of Information and Communications (MIC), and had dialogues with MIC's deputy minister and other officials.The Vietnamese officials expressed strong interest in creating opportunities for cooperation with Taiwan in ICT development. Possible cooperation projects include organizing municipal-level smart city forums, cultivation of IC design talent, information exchanges between Taiwan and Vietnam, and inviting Taiwan experts to serve as advisors in the government sector.Chiu also revealed that CISA will organize a delegation to attend a WITSA-hosted global directors meeting to be held in early October in Armenia, adding that she will recommend Taiwan experts to speak at the meeting and discuss business cooperation opportunities.At the moment, the world's leading EDA (electronic design automation) specialist Synopsys has a workforce of some 1,000 engineers in Armenia. Chiu said that if Taiwan can introduce ICT engineers from Armenia, its shortage of ICT talent can be significantly eased.As Synopsys has reportedly sent some talented Armenia engineers to Taiwan's National Chiao Tung University for advanced studies through an industry-academia cooperation mechanism, Chiu urged the government in Taiwan to use the channel to carry out smart city cooperation projects and tech talent exchanges.

Vietnam has a population of near 100 million and there are over 70 million handset and Internet users, providing a good foundation for stable development of the country's information and communications technology (ICT) industry, according to Phan Tam, deputy minister of Vietnam's Ministry of Information and Communications (MIC).He was making the remarks during a meeting with Digitimes president Colley Hwang.MIC statistics show that Vietnam's aggregate ICT industry production value amounted to US$91.59 billion in 2017, shooting up 35.3% from US$67.69 billion in 2016, with the growth numbers indicating a booming development of the country's electronics industry. Samsung Electronics' handset production base in Vietnam has been the major source of Vietnam's ICT exports, but the company has just unveiled its plant in India and is also likely to face growing competition. This has prompted Vietnam to show much interest in diversifying industrial production and cultivating tech startups.Vietnam customs statistics also indicate that the country's exports of diverse electronics hardware devices including handsets came to US$81.60 billion in 2017, representing a sharp annual increase of 38%, much higher than the corresponding growth of 11% registered in 2016. Of the total exports, handsets commanded US$45.27 billion, up 13.2% on year; and exports of computers and peripherals soared 36.8% on year to US$26 billion. These electronics products alone had contributed trade surplus of over US$20 billion in 2017.More investments in IC design, 5GPhan Tam is well aware that Vietnam can hardly develop a solid footing in the market should its technologies fail to catch up with international standards. At the moment, Vietnam's electronics industry highly relies on export trade and on contribution by Samsung. And therefore the MIC hopes for more investments in the development of IC design and 5G technologies to enhance industry diversity, and also shows great concerns about whether smart city applications can bring more opportunities for local industries.On another front, MIC estimates total annual production value of Vietnam's software industry at US$3.8 billion for 2017, up 24% from 2016. In terms of ICT applications, 60% of elementary schools and 80% of middle schools have provided computer and online teaching programs; all commercial banks have offered electronic payment services, and 96% of financial transactions can be done online; and mobile banking penetration rate stands at 34.5% while up to 99% of enterprises can pay taxes via electronic channels.Vietnam's information service industry had managed to maintain a high annual export growth of 30-40% during 2013-2017 while also keen to provide business process outsourcing (BPO) services for software programs, with Japan being the largest export outlet and service recipient. Vietnam is now Japan's second largest supplier of information services and also a favorite partner for Japan enterprises. In recent years, Vietnam has been active in developing digital content and gaming industries, with the 2017 production value of the former rising 8% on year to US$800 million and the latter surging 27% to US$370 million.Talent groomingTalent is fundamental to ICT development. Vietnam now has a total of 250 universities and colleges, able to foster over 50,000 ICT personnel per year. The country's ICT sector now has around 900,000 employees, with the number increasing at an annual rate of 7-10%. Statistics show that the starting monthly pay for ICT employees in Vietnam now averages US$288, and their annual incomes average US$7,000.Now in Vietnam, young people command a high portion of its population, and more young people are moving to urban areas, providing a major advantage for ICT development in the country. Vietnam will not rule out ICT talent exchanges with foreign countries, so as to allow its new generation to experience the latest tech and industry developments.Phan Tam pointed out that along with stable economic development in Vietnam, many business sectors have produced many successful private enterprises. But this is not the case with the ICT sector, which has not seen many successful private firms, with the exception of FPT and telecom operators. Vietnam holds Taiwan's ICT industry in high regard, and is willing to learn from Taiwan about how to inspire the private sector to foray into the ICT industry.Phan Tam, Vietnam's deputy minister of information and communicationsPhoto: Vietnam's Ministry of Information and Communications

The ASEAN market sees fast growth in e-commerce, with total transaction value increasing by about 20% annually, according to ASOCIO (Asian-Oceanian Computing Industry Organization) chairman David Wong Nan Fay.Wong, who is also founder and CEO of Malaysia-based logistics service provider SnT Global, was speaking to Digitimes on the sidelines of the ASOCIO Smart City Summit 2018 that took place in Hanoi, Vietnam, during September 18-19.The e-commerce transaction value in ASEAN takes up about 10% of its total retail and wholesale market currently, and the proportion will keep rising to 30% eventually, Wong said.Wong noted that chain convenience stores function as places for e-commerce customers to collect purchased items in Taiwan.He said this is a delivery model very suitable for densely populated cities in ASEAN, and SnT Global is setting up networks of delivery spots as part of its logistics services for e-commerce operators in the ASEAN market.In the Malaysia market, SnT Global has set up about 2,000 delivery spots and plans to expand the network to 10,000 in two years, Wong said, adding that the goal is to ship the goods within three hours of receiving orders.The Malaysia government in 2017 decided to develop a Digital Free Trade Zone in Kuala Lumpur through cooperation with China's e-commerce giant Alibaba Group, in a bid to help Malaysia-based small- to medium-size enterprises export products via e-commerce, Wong said.David Wong Nan Fay, ASOCIO chairman and CEO of SnT Global Photo: Digitimes staff

Facing the great waves of the Fourth Industrial Revolution, Vietnam is keen on promoting e-government projects, and the government there has selected five main cities, including Hanoi, Ho Chi Minh City, and Danang, as pilot sites for smart city development, covering clean energy, environmental protection and transportation, according to Truong Gia Binh, chairman of FPT Group, the largest information technology service company in the country.Binh told Digitimes in a recent exclusive interview that the information technology service market scale in Vietnam is estimated at US$16 billion a year, with an annual growth of 13% seen in 2017.FPT just marked its 30th anniversary on September 12. Binh said that he founded FPT from scratch 30 years ago, when Vietnam was just beginnig to introduce reform and open up. After returning to Vietnam following 11 years of studies in the Soviet Union, Binh decided to venture into the country's information service market, which at the time hardly seemed promising.But now, the FPT Group, dedicated to information services, 3C channel distribution services, and computer education and training services, has a total of 35,000 employees and annual revenues of US$2 billion. The group has extended its software contract services and call-center business to 33 countries, maintaining business ties with at least 100 out of the world's top-500 enterprises.Speaking about Vietnam's future development prospects, Binh pointed out Vietnam has 65% of its population aged under 35, with the average age of its people at only 27. In addition, Vietnamese students have very good mathematical skills, frequently winning prizes in international math contests, which has prompted FPT to engage in computer education as a major business.Furthermore, the FPT Group has over 600 franchised partners in Vietnam for 3C products distribution, and it has also set up a joint venture with Taiwan's Synnex Technology International to develop local 3C distribution business in Vietnam.But Binh still has a lot of concerns about whether to foray into production of consumer electronics devices including handsets.At the moment, Samsung Electronics undoubtedly is the top vendor in Vietnam's handset market, bolstered by its volume production capability there. Also, chances are also not high for Vietnam makers to outperform China handset brands in the market.Accordingly, Vietnam is inclined to produce network communication products associated with national security, and develop local information service business.Truong Gia Binh, chairman of Vietnam's FPT GroupPhoto: Digitimes staff, September 2018

Wonders Information, a major smart city service provider in Shanghai, China, is aggressively utilizing such newly emerging technologies as cloud computing, big data, IoT, and mobile Internet to work out comprehensive smart city solutions, according to company chairman and president Shi Yibing.Shi told Digitimes in a recent interview that since its inception in 1995, Wonders Information has made it a management philosophy to better human lives with informatization, with its business transformation driven by innovations. Over the past 23 years, the company has amassed abundant experiences in various industries and developed prominent advantages in industry software and services, including many cloud services associated with smart city solutions.Through its medical healthcare cloud platform, for instance, Wonders has served around 600 million people in China, having established a solid foundation for medical big data. Its healthcare cloud platform has established connections with hundreds of public hospitals and medical service institutes, and has processed more than 20PB of data.Shi said that through healthcare IoT devices deployed at communities by his company's medical healthcare cloud platform, residents can conduct physical checkups on their own, such as checking their blood sugar and blood pressure. The ensuing data can be transmitted to the cloud platform via IoT devices, thus facilitating connections between residents and contracted physicians. So far, Wonders healthcare cloud has extended services to a total of 241 community healthcare units in all the 16 administrative districts in Shanghai.Citizen cloudThe company's citizen cloud is a one-stop public service platform for citizen users registered with real names, built with cloud computing and mobile Internet technologies. With an open service architecture, the platform has developed a brand-new service ecosystem integrating government services and social services, able to handle real-name ID verifications, online-to-offline services, and multi-end accesses, among others.As of the end of August 2018, the company's Shanghai citizen cloud has recorded 9.2 million registered users, providing 120 services to citizens through 34 connected administrative service units spread in all the districts of Shanghai. The Shanghai citizen cloud will release its 6.0 version in late September, allowing individual citizens and enterprises to get administration services through mobile Internet, which will be as convenient for them as making online purchases. The citizen cloud service has been well recognized by many other governments of all levels and citizens in China, according to Shi.In terms of medical AI applications, Wonders will move to further develop smart mobile medical care, new pharmaceuticals and new medical insurance, medical big data applications, and health management.Wonders will also step up big data applications to smart city security, smart transportation, smart transportation and smart market monitoring fields while also deepening the establishment and operation of enterprise clouds to optimize business environments, according to Shi.Reputable accreditationsFurthermore, the company will continue to work out precision core business systems in various industries in smart cities while applying those solutions well received in the coastal areas to other provinces, such as those for medical care, administrative services, and market monitoring, among others.The company has many highly reliable, safe and useful cloud services available for use on a rental basis. It has won the IDC cloud service license issued by the Ministry of Industry and Information Technology, the public cloud computing capability compliance certificate from the Information Technology Service Sub-association of Chinese Electronics Standardization, and passed the cloud host reliability and safety accreditations by the Open Data Center Alliance, Shi disclosed.Shi stressed that on the basis of its grand smart city platform, Wonders will also expand cooperation with ecosystem partners of different industries to jointly develop new products and new business models and cultivate unicorns in the fields of citizen cloud, healthcare cloud, pharmaceutical cloud, financial insurance cloud, and more.Wonders Information chairman Shi YibingPhoto: Company

Successfully starting his own business twice, Gwong Lee, managing director, Translink Capital, sold his second firm for a high price 15 months after its establishment and he was named one of Silicon Valley's top-10 most important persons of the year. Afterwards, Foxconn chairman Terry Gou invited Lee to serve as chairman of CyberTAN, a Foxconn subsidiary, and guide Foxconn Technology Group's investment deals. Drawing on his entrepreneurship experiences, Lee offers some thoughts and advice for Taiwan startups.Without a market, even a strong startup team is uselessTranslink Capital mainly invests in US-based startups during Series A and Series B rounds and helps them build partnerships with leading Asian high-tech firms. Lee pointed out as many Taiwan-based firms are looking to transform themselves in hopes of spurring further growth and Silicon Valley has a host of startups that can inspire large enterprises with ideas for new business models, they can join forces. Translink Capital currently works with Taiwan-based firms including Foxconn, Quanta, Inventec and UMC.When evaluating whether a startup is worth investing in, Lee mainly considers three aspects: the market, the product and the leader. Among them, the market is the most critical factor. Without a market, even a strong startup team has no use. In 1987, Lee started his first business, Digicom Systems, specializing in point-to-point communication by integrating digital signal processing chips in products to replace traditional devices. Digicom Systems was an instant hit and got OEM orders from AT&T in its second year of operation. In the five years from 1988 to 1993, AT&T remained the biggest customer contributing to more than half of Digicom Systems' revenue. Still new at entrepreneurship at that time, Lee thought technology was the key to his success and customers would automatically come to him if he had the technology they were after. Paying no attention to market needs, he made no customer visit at all in six years. In retrospect, Lee regrets not making efforts to strength customer relationships and understand market needs as well as customer plans. If he had done so, Digicom Systems might have had more opportunities. Fortunately, Digicom Systems was acquired by Singapore-based Creative Labs in 1994, which turned out to be a happy ending.When starting his second business, TransMedia, in 1997, Lee was well aware of customer needs and TransMedia could develop products in as short as 15 months and began proof-of-concept validation with customers. Cisco Systems then acquired TransMedia for US$500 million. 3Com and Nortel were among those that also bid for TransMedia at the time. Lee suggests that startups select buyers not just based on the offer price but should also consider if they share a common business philosophy and comparable professional capabilities, which will sustain their future development together or else there may be compatibility problems after the merger.Whether a startup has a right product is the second consideration in investment decision-making. A startup team must find the right people to make the product or find a mentor to provide guidance. Many startups can design a good product but don't know the first thing about hardware or system so they can only outsource product manufacturing. However, it can be a challenge to manage OEM and control product quality, indicated Lee.The third factor is the team and the leader. Lee places importance on three leadership qualities: pioneering spirit, persistence and focus. In particular, he said many entrepreneurs are full of ideas and want to do a lot of things. Without focus, they have too much on their plate and end up achieving nothing due to limited resources. They put out too many products but have no one in charge of promoting them. The results are certainly unsatisfactory. As such, it is important to have focus.Applications combining hardware, software and cloud are suitable for Taiwan startupsThe investment deals that Lee is currently overseeing at Translink Capital center on Industry 4.0, IoT, AI, machine learning, AR/VR and industrial applications. In general, he favors startups that already have customers. A startup pitch with only a few presentation slides or prototypes will unlikely secure any funding.Half of the firms that Translink Capital has a stake in also receive funding from corporate venture capital of Translink Capital's partners. They provide different perspectives that complement the investment deals made by corporate venture capital of Translink Capital's partners, which may sometimes be too focused on certain areas to have an overview.With respect to the startup ideas for Taiwan, Lee suggests the combination of hardware, software and cloud. The omnipresent Internet has been around for two decades but Taiwan has yet to foster any outstanding Internet companies with the only exception being PChome. Most software engineers work for the semiconductor industry, resulting in a poorly developed software industry. As such, now for active startup developments, Lee advises Taiwan startups make efforts toward applications combining hardware, software and cloud.It is never easy to start a business. One of Lee's friends has extensive experiences in funding high-tech firms. The friend has invested in HP, Intel and Apple and received handsome return but has also engaged in 50 angel investment deals that all failed. Although Lee rarely does angel investing, he will join the game in Pre-A round funding if he sees a team with very good potential. Whether an angel investment deal can succeed hinges on the angel investor's experience and connection. Even if the angel investor is not funding a business in his own field of expertise, his business know-how, such as management of cash flow, logistics, product R&D and talent recruitment, can still apply to different industries.As a final piece of advice, Lee emphasizes that startups must have a clear go-to-market strategy, including sales channels, marketing and pricing plans, as well as how to build the visibility of the startup in the marketplace. Only one out of 10 startups receiving angel investment gets to proceed to Series A funding. Whether you end up being the one or among the remaining nine depends on how well prepared you are.(Editor's note: This is part of a series of interviews focusing on the problems and opportunities that Taiwan-based startups face. The interviewees are venture capitalists and angel investors from Silicon Valley and Taiwan.)Gwong Lee, managing director of Translink CapitalPhoto: Joseph Tsai, Digitimes, May 2018

Having started three businesses, two of which successfully went public, founder of Vivo Capital Frank Kung set foot in the biotech sector in the 1970s. Thanks to Kung's decades of experiences in investing in biotech firms in the US and Greater China, Vivo Capital has made itself the largest biotech venture capital fund in Chinese communities worldwide, managing over US$1.7 billion in capital including the Taiwan Silicon Valley Technology Fund. Furthermore, Kung often attends the Taiwanese government's Bio Taiwan Committee meetings and offers advice for the development of Taiwan's biotech industry.Know the difference between healthcare products and consumer productsAccording to Kung, biotech products include healthcare products and consumer products. Investors must have a clear understanding on the difference between the two to avoid making blind bets. Many investors don't have the slightest idea about the nature of business of the biotech firm they invest in. They are merely betting on the assumption that it will be acquired by a big enterprise later on. Such wishful thinking can be problematic. A major difference between healthcare products and consumer products is the former have to undergo a series of tests and obtain approval from government authorities, such USFDA or Taiwan FDA, in order to go to market while the latter, such as dietary supplements and facial masks, have to overcome challenges in marketing and product differentiation. Both the investors and the entrepreneur need to have a clear objective as to whether the startup they are funding or founding is selling a product or technology. If it is selling a product, they must know whether it is a healthcare product or consumer product. Only by having a clear picture can investors further assess the potential and market value of the startup.In talking about healthcare products, Kung pointed out Taiwan's current conditions are rather unfavorable for startups endeavoring on healthcare product development. There are three elements to startup success - technology, talent and capital. Taiwan must be able to eliminate obstacles with respect to these three elements in order to foster a flourishing biotech industry. First of all, in terms of technology, Taiwan has very few firms specializing in making innovative healthcare products. Many pharmaceutical firms only produce generic drugs or new forms of old drugs. Strictly speaking, they are not working on biotechnology applications, let alone making innovations. As such, for a Taiwan biotech startup to succeed, it must have unique technology to be able to establish market presence.With respect to talent, Taiwan lacks the human resources to develop healthcare products. In fact, Taiwan has plenty of professionals doing medical research but few of them have the capability to commercialize research results. Rather than recruiting medical scientists from abroad to do product research, Taiwan should seek specialists in commercializing healthcare products. This will be more helpful in pushing the development of Taiwan's biotech industry, suggested Kung.As to capital, it is not easy for biotech startups to obtain funding in Taiwan. Taiwan's venture capital funds mostly invest in mature companies and impose more stringent requirements on startups. Furthermore, having accumulated more than a decade of experiences in funding biotech businesses, investors have gained a more in-depth understanding on the industry but the capital funneled into biotech firms is still insufficient. As investors are still drawn to pour fund into firms with promising technology, Series A funding is generally not a problem. However, despite lower technological risks in Series B funding, startups face the challenge as to how to enhance their market value and find experienced professional investors to support them. What's worse is that regulatory restrictions have deterred foreign investments in Taiwan's biotech businesses. As a result, the third and fourth rounds of financing become even more challenging, which also makes investors more conservative during earlier-stage funding.The development of healthcare products is a long and risky process. It's time consuming and capital hungry. For example, it took TaiMed Biologics 10 years to have its new drug Trogarzo approved by FDA for the treatment of multidrug resistant HIV-1 infection.Taiwan should create a healthy investment climate and relax regulatory controlTake Vivo Capital for example. The biotech firms that Vivo Capital invests in mostly already have their new treatments in clinical trial with human experiment data and case studies available so they can better spur investor interests. Although there are many medical centers and medical professors leading research projects in Taiwan, without a good judge of talent, these projects mostly end up as papers in academic journals and have no chance of being assessed for their commercialization potential. Kung advises that entrepreneurs aspiring to biotech development should take some time to study market needs so that they are able to come up with the best startup idea.The supply of talent is a big challenge to biotech industry development. Although many biotech research organizations have instituted technology transfer programs, most of them are just following the trend without extensive know-how. The lack of talent specializing in commercializing healthcare products is Taiwan's greatest weakness in its endeavors to promote biotech industry development, reiterated Kung.In terms of technology, it will be a long way to go for Taiwan-based firms to develop new biotech products from scratch. It may be a better idea to bring in validated technologies from abroad. However, the basic consideration is still whether there is a favorable environment and incentive fostering biotech development. What the government can do is to relax regulatory control and create a healthy investment climate, rather than using state funding to support a few biotech firms, which can only generate short-term benefits but not sustainable long-term growth for the industry.Nevertheless, the outlook for the Taiwan biotech industry is not all bleak. Taiwan-based firms still have opportunities in consumer biotech products. For example, Fitbit took the market by surprise with its success at wearable devices for healthcare purposes. It is even leading the competition by a widening distance. If Taiwan-based firms set a goal to develop consumer biotech products, they must have innovative ideas, know the competition well and realize what it takes to penetrate into the market. They also need to overcome technological barriers so that their products can cater to consumer preferences. Kung emphasized entrepreneurs endeavoring on biotech development need to stay on top of market conditions and establish a clear market position. Only by doing so can they minimize the risks when starting a new business.(Editor's note: This is part of a series of interviews focusing on the problems and opportunities that Taiwan-based startups face. The interviewees are venture capitalists and angel investors from Silicon Valley and Taiwan.)Frank Kung, founder of Vivo CapitalPhoto: Frank Kung

Co-founder of Translink Capital Jackie Yang has accumulated 21 years of experience in venture capitalism since he first set foot in the field in 1996. Having witnessed the rise and fall of Taiwan industries and changes in technologies, Yang thinks although the PC and semiconductor industries that have fueled Taiwan's economic growth are experiencing market saturation and maturity, startups still have a good chance at success if they are able to capture opportunities. He gives some pointers and suggestions to Taiwan's entrepreneurs based on his experiences in funding successful startups.Five things to focus on for startups looking to bring innovations to people's livesOver the past decade or so, venture capital funds in Silicon Valley mostly invested in startups endeavoring on innovative hardware devices. This is called the "Hard Tech" sector including network equipment, optical communication and semiconductor firms. However, these businesses have begun to face market saturation since 2000. Not a lot of startups were emerging and new companies were mostly spin-offs from large enterprises or founded by people originally working for large enterprises. Venture capital funds today mainly invest in startups that bring creative changes to people's lives, such as Uber, AirBnB and e-commerce firms. Yang offers five suggestions to Taiwan startups that wish to venture into lifestyle innovations or consumer devices.Get familiar with the local cultureLifestyle innovations have to be largely based on how local people live. For example, if you live in San Francisco, you'll know that not only is it difficult to hail a taxi on the street but it is also expensive to take one, not to mention the fact that taxi service there leaves a lot to be desired. Then, you can understand how Uber could quickly rise up in San Francisco. However, for Taiwan startups looking to work on lifestyle innovations, the local market is too small. If they target the China market instead, they need to have someone familiar with the China market to join the team and they also need to work as aggressively as young people in China to be able to compete in the China local market.Target niche market segmentsCamera drone maker DJI and action camera maker GoPro both chose to target a specific group of users. DJI focused on developing drones for professional users right from the beginning. This group of users come from all over the world and form an online community, where they engage in communication and help DJI build up a strong brand reputation. The success of GoPro is a good example demonstrating the effectiveness of word-of-mouth marketing. Among the slew of camera suppliers, GoPro was the first to make cameras for extreme sports and put the captured video footages on YouTube, which served as powerful advertising. Taiwan-based MSI, specializing in gaming PC, is another successful firm that focuses efforts on a niche segment.Creative sales approach: direct marketingOne thing GoPro and smart wristband maker Fitbit have in common is their direct approach to product sales, which is not often adopted by Taiwan-based firms. Besides GoPro and Fitbit, Xiaomi also makes use of such a creative sales strategy and actually saved a large sum of marketing costs in its early-stage expansion. In addition to selling products directly to users, Fitbit is able to achieve great success also because it chose to add network communication capability to its pedometer early in the development stage, which is a critical feature to consumer devices and enables data sharing with smartphones.Differentiating featuresThe success of Fitbit has spurred a slew of followers making smart wristbands. However, startups should not make me-too products and instead must come up with differentiating features. Despite being a follower also making smart wristbands, Misfit did a survey before they entered the market and found the biggest complaint from users is battery life, so it came up with wristbands requiring no charging, allowing it to successfully penetrate into the market.It is not easy for startups to develop differentiating technologies, especially in the case of mature industries that hold a high technological barrier. On the other hand, in the case of emerging technologies, there may be fewer people with specialized expertise to compete against but this also means it is more difficult to get help when you encounter a bottleneck. Taiwan-based startup Appier, focusing on AI technology, is among the few firms that possess its own R&D strength. It provides AI-based big data analytics to help enterprises with advertisement placement and digital marketing. Having accumulated a myriad of successful use cases, Appier generates impressive revenues, half of which are contributed by overseas clients.User base is the keyAside from consumer devices and AI-based application services, Translink Capital also invests in social media. According to Yang, as long as a social media site gains a sufficient user base, its profitability is just a matter of time and the business model is usually not a real concern. The key point is whether it can operate across borders and not be limited to a single region.The automotive industry is undergoing revolutionary changesAs a venture capitalist, Yang is often asked which industry he is currently taking an interest in. In response to the question, Yang said among traditional industries, the automotive sector is the one faced with the biggest challenges in recent years. All automakers are bracing themselves for impact. "C.A.S.E" – each of these has the power to turn the automotive industry upside down. "C" (connected) means cars, like smart wristbands and watches, must have network communication capability to become connected cars. "A" (autonomous) refers to autonomous driving backed by a multitude of sensor, software and AI technologies. "S" represents "smart city" or "sharing" which includes the innovative services, such as Uber, and even Zipcar car sharing, changing how people choose means of transportation. "E" refers to electric car, which is undergoing flourishing developments in China.Self-driving cars combined with ride sharing or car sharing services will bring radical changes to user habits. For example, consumer demand for vehicles may go down or it is more precise to say that consumers may no longer be those making car purchases. Automakers are acting prudently to cope with future changes and many of them have begun to invest in or expand into ride sharing services.Amid rapid technology advances and market changes today, not only do startups need to capture opportunities but large enterprises also sustain significant impact. When the market becomes saturated, how can large enterprises maintain growth by fostering innovations? Yang suggests that every firm should allocate at least 0.5-1% of its budget for startup investment. Startups can serve as a unit doing advanced R&D for large enterprises, especially when their internal R&D units have problem keeping up with new trends and are falling behind schedule. Samsung, wishing to take a different approach from the competition, makes active efforts to work with startups and has a well-developed policy in this respect. Among Taiwan-based businesses, Foxconn is the most aggressive in startup investments.Japan's second largest property insurance firm has recently funneled investment into Translink Capital in hopes of gaining an understanding on innovative technologies through Translink Capital. In doing so, the Japanese firm not only seeks partnership opportunities but also looks to prevent emerging FinTech services from grabbing its market share.(Editor's note: This is part of a series of interviews focusing on the problems and opportunities that Taiwan-based startups face. The interviewees are venture capitalists and angel investors from Silicon Valley and Taiwan.)Jackie Yang, co-founder of Translink CapitalPhoto: Joseph Tsai, Digitimes, May 2018