AppWorks announces $50M fund to invest in Taiwan startups

AppWorks founding partner Jamie Lin, center, with LPs at a press event in Taipei

AppWorks, the Taiwan based accelerator and venture fund, today announced it has established a US$50 million fund for investing in domestic startups.

Contributors to the fund consist of a number of Taiwanese conglomerates and corporations. The list includes Cathay Life Insurance, Taiwan’s National Development Fund, Phison Electronics, best known as a maker of flash drives; Far Eastern, the island’s third-biggest telco; CID group, a Shanghai-based VC firm best known for investing in Taiwanese semiconductor firms; and China Trust Capital.

The fund had been an open secret for months within Asia’s startup community, but today marks AppWorks’ official public unveiling of the news.

AppWorks’ founding partner Jamie Lin says that the fund will be used to support Taiwanese startups that go through its accelerator program, which has been active since 2010. To date, it has graduated more than 190 teams. Its investment branch, managed by IC Jan, Nice Cheng, Joseph Chan, and Lin, funded 19 portfolio companies through its previous US$11 million fund.

At a press event, Lin emphasized how Taiwan is in the midst of a crisis. Many college graduates are frustrated by a perceived lack of economic development. Lin believes that by fostering Taiwan’s internet industry, Taiwan can prevent itself from falling into economic decay.

Reaching out to Southeast Asia

Lin tells Tech in Asia that AppWorks will run its second fund much like its first. But he hopes to bring more Southeast Asian teams into its network, and also help Taiwanese teams expand into Southeast Asian markets.

“A lot of people haven’t noticed, but Taiwan is still the biggest consumer market if you consider Taiwan part of Southeast Asia. So if you’re a Southeast Asian startup and you’re doing well in your country, Taiwan should be a market that you should think about expanding into.”

The US$50 million dollar fund marks a watershed moment for Taiwan’s startup ecosystem. The island contains abundant engineering talent, a seasoned hardware OEM industry, and plenty of big conglomerates with money to spend. It also is home (in one way or another) to several venture capital firms, like CID Group and WI Harper, which built their legacy by funding manufacturing ventures in mainland China.

But Taiwan’s startup culture doesn’t live up to those aforementioned credentials. Taiwan has lagged behind global-facing markets like Singapore and Hong Kong, as well as large homogenous markets like South Korea and Tokyo, when it comes to dealflow.

There are many reasons that explain this lag – most of which are not unique to Taiwan. But some will point to the lack of early-stage, internet-minded venture capital as one factor inhibiting innovation. AppWorks’ neighborhood fund of US$50 million is, by any measure, a win for Taiwan.

The fund’s announcement has arrived as the Taiwan government continues to make the island more hospitable for internet entrepreneurship. Under the National Development Council’s HeadStart Taiwan project, the government has invested over US$80 million across four private VC firms, including AppWorks, to spur growth among the island’s startups. It is also relaxing restrictions on hiring foreign talent, and is building a 20,000-square-meter startup cluster for housing local and international teams.

See: 10 great co-working spaces in Taiwan