Yesterday, Taipei’s AppWorks officially disclosed that it had raised a US$50 million fund from eight Taiwanese conglomerates and one government organization.
Nearly five times larger than AppWork’s 2011 fund, this new pool of capital roughly equals recent funds raised by Singapore’s Monk’s Hill Ventures and Japan’s CyberAgent Ventures. Given that Taiwan generally falls behind those markets in terms of early-stage funding for internet startups, AppWorks is helping to fill a void.
Yet the fund also points to deeper challenges that Taipei-based startups will face in the coming years.
Since its inception in 2010, AppWorks has been an active and sometimes divisive force in Taiwan’s startup community.
Founding partner Jamie Lin began AppWorks after returning to Taiwan from New York City, where completed his MBA and co-founded a startup called Social Sauce. He earned a loyal following of readers through his blog, where he waxed on the importance of Silicon Valley-style entrepreneurship. Recently, Lin published a book called “Entrepreneurship,” where he lays out the models and strategies that make startups successful.
Yet some in Taiwan’s startup community will point out that AppWorks’ track record doesn’t live up to Lin’s media presence. Many teams that pass through AppWorks’ accelerator program don’t seem to last beyond Demo Day. Its early investment portfolio consists primarily of domestic-facing teams, which attracts criticism from Taiwanese founders who feel that the island should build for global markets, not just itself. One Taiwanese entrepreneur once described AppWorks as “educational,” implying it’s more about teaching Startuphood 101 than building companies with judiciousness.
Lin tells Tech in Asia that he doesn’t object to this description.
“AppWorks’ accelerator is not there to serve the fund, but the fund is there to serve the accelerator and the community,” he says. “We are building AppWorks for Taiwan, not for us or for our investors. Benefitting the community is more important than making money, and we believe that by building the community we can actually generate even better returns.”
Within its portfolio and accelerator, AppWorks’ most high-profile companies include EZTable, a table-booking app that that recently raised US$5.5 million, and PubGame, a mid-core game publisher that raised US$5 million in 2013. Both companies have a presence in Southeast Asia. It also invested in the Kuo Brothers, who oversee three ecommerce sites (one of which is just for fish) and are set to IPO on the Taiwan Stock Exchange this year. Lin points to Fandora, an ecommerce site, and Chocolabs, and app studio, as two portfolio companies enjoying strong traction.
Other AppWorks teams have gone on to hit noteworthy benchmarks. Contest promotion platform Bounty Hunter joined 500 Startups, and smart home monitor Sentri joined Microsoft Ventures accelerator. Airsig, which builds tech that lets users control their smartphones with motion gestures, secured US$2 million in funding from Foxconn.
More importantly, AppWorks has helped foster a vibrant startup mini-community in Taiwan. Lin often touts AppWorks as “Asia’s biggest accelerator,” having graduated over 190 teams. That might seem like a vanity metric, but the power of networks is real. AppWorks plays an active role in managing alumni groups, community outreach, and connecting people. Increasingly, founders like JoyRay’s Jerry Chang are leaving Taiwan’s hardware giants to start companies in AppWork’s office space.
“When we first started, if you work at HTC or MediaTek, you would never come out to join a startup. But now that when we have alumni that have AppWorks experience, and when they tell their friends to come join, they’re more inclined,” says Lin.
Is “By Taiwan, For Taiwan” good for Taiwan?
Entrepreneurs in Taiwan often lament that its legacy VC firms don’t understand internet-based business models, and its famous guts-and-hardware firms (MediaTek, Foxconn, HTC, Acer, Asus) are too risk averse to bet on startups. Through its US$50 million fund, AppWorks deserves credit for bringing old Taiwanese money into younger pockets.
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