Jack An, Analyst (安良方 / 分析師)

Jack is an Analyst covering AppWorks Accelerator. Before joining the team, he was a co-founder and early team member at two InsurTech startups, where he developed a passion in user experience and product development. Previous to his startup journey he worked as a commercial property underwriter at Chubb Insurance in New Zealand. Jack graduated with a Bachelor of Music from Waikato University where he studied classical piano. He loves to cook, read and is a practicing stoic.

During the first half of 2021, public interest in blockchain reached an all-time high. Towards the end of last year, we saw an upswing in the number of organizations and enterprises buying and holding cryptocurrencies, causing the price of Bitcoin to cross US$60,000 for the very first time in March. Talk of crypto quickly made its way into dinner table conversations, and it seemed as if everybody on the block was eager to dive into the world of blockchain.

For those that have been in crypto for a while, this bull run finally let them exit many of their alt-coin investments from the 2017 ICO wave, as the wider market price sentiment rallied alongside the mainstream coins to reach an all time high. The other worthwhile trend over the past six months has been the mainstream adoption of NFTs (non-fungible tokens), a technology that provides true ownership capabilities and authenticity over digital assets. We saw hoards of multinational brands, intellectual property owners, celebrities, and individual creators quickly embrace this new technology and flock to various platforms to either buy NFTs or mint some of their own. 

It’s certainly been an exciting ride since AppWorks Accelerator started publishing Taiwan’s Blockchain Ecosystem Map two years ago. In line with previous editions, we’ve observed several notable trends that have defined the blockchain industry this past half year. 

1. Branded drops accelerated end-user adoption of NFTs

The NFT standard was formulated in 2017, so why did it only catch on this past year? It really came down to two key driving forces. First, mainstream brands and IPs started employing NFTs as a vehicle to interact with their fans, such as the NBA through NBA Topshot, Taco Bell, and even the band Kings of Leon. By creating a virtual experience through NFTs, brands were able to engage and create a unique bond with their loyal fans despite physical restrictions under COVID-19, allowing them to also generate alternative revenue streams from the sales of NFTs.

Second, NFTs are becoming an alternative asset class for yield-driven crypto holders and investors. During the ICO era in 2017, most developers and investors were either busy issuing coins or trying to find the next cryptocurrency with hundred-fold growth potential; it wasn’t long until this model became monotonous and out of fashion. Fast forward to 2021, decentralized finance (DeFi) hit a US$100B market cap and drove crypto prices to all-time highs. As NFTs started emerging, crypto holders were naturally drawn to their consumer appeal and accretive potential, propelling NFTs into the limelight for mass adoption. Much of this adoption is supported by advancements in the underlying infrastructure, including a growing ecosystem of protocols, marketplaces, games, developers, creators, and of course, buyers. 

Evidently, a lot of moving parts have come together in the last few years to catapult NFTs into stardom. In Taiwan, the NFT landscape has also evolved significantly compared to the second half of 2020. For example, Lootex, an alumnus of AW#20, and Oursong, a subsidiary of KKBox, both established NFT products long before the recent bull run. All the effort they put in during previous cycles are now bearing fruit, with both companies receiving an influx of new partnerships and commercial opportunities. During this time, we also saw a proliferation of new NFT players, such as JCard and Fansi, effectively creating a diverse selection of platforms for creators to choose from.

With Beeple’s First 5000 Days selling for US$69 million, celebrity engagement, and primetime media including even SNL releasing NFT coverage, all the major signs of a bubble were there. And surely enough, monthly transaction volume experienced a significant decline of 90% shortly after its record high in May. Nevertheless, as witnessed with previous blockchain hype cycles, where there is money, there will be talent, and where there is talent, there will be development. Ultimately, NFTs are still in the early innings, and while collectibles have served as the primary use case so far, this new technology will eventually extend across any product, service, or application that needs to use a digital ID. 

2. Taiwan’s regulation catching up to the world 

Up to recently in Taiwan, the laws and regulations related to cryptocurrency have been very vague. And for those trying to stay compliant, they could only follow the existing but outdated mandate, or hope for the best by following foreign regulations. This was changed in April this year, as the Executive Yuan aligned their stance with the rest of the world by implementing strict AML/KYC requirements when dealing with cryptocurrencies. 

Existing players like MaiCoin—the primary fiat-to-crypto exchange in Taiwan—faced minimal impact as stern KYC controls were already in place. However, teams working on DeFi, lending, and investing may face greater obstacles, as it is challenging to design a user experience in a decentralized manner that complies with regulations while still adhering to the spirit of decentralization—a faux pas that many blockchain founders and evangelists are becoming increasingly critical of. Going forward, we expect decision makers to implement more comprehensive and tailored regulations for DeFi to prevent bad actors from gaming the system and taking advantage of everyday consumers; this will ultimately encourage more users and wider adoption, benefitting the ecosystem as a whole. 

3. Influx of funding and talent set to accelerate development

With the price of bitcoin hitting an all-time high in H1 2021, investors around the world are taking note of the industry’s activities. For example, in May this year, DApp Pocket (AW#19) announced that they had been acquired by Turn Capital, a family office run by 17LIVE co-founder Joseph Phua. It also merged its two products, DApp Pocket & Cappuu, into Coinomo, with the aim of bringing crypto to mainstream users in Southeast Asia. 

At the same time, another blockchain wallet developer in Taiwan Portto (AW#19, AppWorks is an investor), whose product Blocto serves as one of the earliest wallets supporting Flow and the largest delegated node by user count to stake Flow tokens, recently announced the completion of a US$8.8 million fundraising round. Primary investors include top blockchain VCs from Silicon Valley and Taiwan, as well as participation from a notable crypto exchange, public chain foundations, NBA players, and well-known American entrepreneurs, among others. 

Despite a significant price correction in cryptocurrencies since May, the momentum that has been brewing over the past six months will likely pay off in the second half of the year, whether through DeFi, NFT, or blockchain applications at both the consumer and enterprise level. We’ve also started to observe more international companies such as Animoca Brands (AppWorks is an investor) enter Taiwan to recruit top-tier blockchain talent, which is expected to further accelerate the development of the country’s blockchain ecosystem. 

Taiwan’s Blockchain Ecosystem Map First Half 2021 is created by AppWorks, Co-produced by Blockchain Media – Blockcast (AW#14), BlockTempo (AW#16), Zombit (AW#21). This map is updated every six months, if you have any comments or suggestions don’t hesitate to contact us at a@appworks.tw.

【If you are a founder working on a startup in SEA, or working with AI, Blockchain, and NFT, apply to AppWorks Accelerator to join the largest founder community in Greater Southeast Asia.】

Natalie Lin, Analyst (林楓 / 分析師)

Natalie is an Analyst covering AppWorks Accelerator and Greater Southeast Asia. Before joining the team, she worked in the search engine marketing and email marketing teams at Zappos, America’s leading shoes and fashion online retailer, where she primarily focused on KPI management, campaign optimization, and project management. Born in Canada and raised in the Middle East, Natalie returned to Taiwan for high school before moving to the US for college and work. She received her Bachelors of Marketing at Case Western Reserve University in Cleveland, Ohio. Outside of work she likes to read, travel, and play video games.

The world has been living with the pandemic for over a year now. Although vaccinations are already underway worldwide, many dramatic changes that businesses have adopted during Covid-19 are irreversible. Both startups and corporates have increasingly turned to AI, cloud, and digital transformation to streamline operations and survive under the new normal, permanently altering the way we do business.

During the first half of 2021, the Taiwanese AI ecosystem reached a significant milestone with Appier’s public listing in Japan, becoming the first Taiwanese startup to officially achieve unicorn status. Additionally, AI chip startup Kneron received funding and resources from major electronics manufacturers Hon Hai and Winbond at the beginning of the year, signaling a continuing demand for increasingly higher-efficiency computing capabilities from major technology companies. 

AppWorks Accelerator has updated Taiwan’s AI Ecosystem Map First Half 2021 with our learnings over the past six months. With the breakneck pace of digital adoption, some applications are no longer limited to a specific industry and have thus been reclassified as cross-industry solutions or technologies, which we believe is more reflective of the AI ecosystem in Taiwan. In reviewing the changes in the overall ecosystem, we have observed several notable trends for the first half of 2021:

New perspectives and opportunities in AI

According to Hive Ventures’ AI report for Taiwanese enterprises released in the first quarter of 2021, 25% of companies have deployed relatively mature AI applications in their organizations. In addition, 53% of interviewed companies believed that there was a need to introduce AI to their organizations, with learning how to deploy and apply AI more effectively becoming a top priority for many leaders. We noticed that companies have gone from directly seeking external solutions to building an internal team to sort integrated data, define application fields, develop and deploy AI models, and finally realize the assimilation of AI in their organizations.

It is precisely because of this trend that we see a number of AI enablers gaining significant momentum in the market.  ProfetAI, an automated machine learning engine aimed at assisting companies to introduce AI with the best efficiency, received pre-A funding from AU Optronics, Hive Ventures, and other investors in early 2021. In addition, Infuse AI received a US$ 4.3M Series A round of fundraising led by Wistron in the first quarter of 2021 to continue to develop their MLOps (Machine Learning Operations) platform. Model development, management, and monitoring are optimized this year to assist more companies in deploying and managing AI models.

The next step in MarTech

As the penetration rate of e-commerce in Taiwan continues to rise, the concept of online-merge-offline (OMO) fusing virtual and physical sales and marketing is demonstrating powerful potential. The effect of Google’s announcement of phasing out third-party cookies continues to ferment, forcing companies to reassess how they manage their scattered online and offline data pockets. Specifically, companies are now left to contend with the challenge of effectively accumulating, integrating, and drawing insights from fragmented customer data, and using that to make agile marketing decisions.  Such issues have created new development opportunities for AI innovation within MarTech.

In the face of making increasingly complex marketing decisions, the data required is more difficult than ever to integrate by yourself. We noticed MarTech startups have begun to actively seek alliance opportunities with other companies, jointly form teams to share data, improve product content together, or even derive new service models. Whether it’s teaming up between new ventures or seeking cooperation in different industries, you can find clues of these synergies happening throughout the first half of 2021. For example, two conversational AI startups, GoSky and Crescendo Labs, cooperated with iKALA’s KOL Radar to collect the data they needed to launch social commerce solutions.

Another MarTech startup, Accuhit, collaborated with key media players in early 2021 to establish a joint venture in AI and big data called DaEX. Through cross-industry alliances, the media’s advertising data will be integrated with CDP (Customer Data Platform) to create a comprehensive marketing ecosystem. In addition to its aforementioned fundraising news, Appier also acquired BotBonnie, an omnichannel social commerce platform to enrich their services and data analysis. With this wave of MarTech teams building strong networks, more AI applications will be born through such synergies.

Roles for large companies in the AI ecosystem

In the development of the overall AI ecosystem, whether in Taiwan or internationally, the participation rate of integrating AI in organizations and processes is increasing. In terms of startup accelerators, AppWorks Accelerator, established in 2010 and focusing on founders working in AI and Blockchain since August 2018 (AW#17), has graduated over 100 AI teams so far and continues to build up Taiwan’s AI ecosystem. In April 2021, AppWorks also announced a partnership with Wistron, an active player in the AI ecosystem, to launch the first batch of the new Wistron Accelerator powered by AppWorks to focus on startups in the fields of AI, IoT, cloud computing, and information security. Various business units of Wistron Group will collaborate with these startups to propose solutions for their departments and seek more growth opportunities within the overall AI/IoT ecosystem.

Leading AI chip maker NVIDIA also announced that it will establish Asia’s first NVIDIA Inception AI startup base in Linkou’s innovation park, supplemented by the NVIDIA Inception AI accelerator program to inject talent and innovative technology into Taiwan. In addition, startup accelerators that support AI startup teams, including SparkLabs Taipei, Taiwan AI x Robotics Accelerator, and the CIAT Accelerator, are all recruiting AI startups to join them.

Taiwan AI Academy Foundation and Taiwan AI Labs are Taiwan’s representative institutions in AI education and research, respectively. The former, a consortium, combines industry and academia to promote the implementation of AI in various industries. It promotes services for AI project evaluation and transformation strategies. Taiwan’s smart driving test lab and Taoyuan’s innovation park connect government and corporate resources to provide an R&D environment for self-driving cars to test. With organizations now banding together to push the AI agenda forward, we will continue to see the demand for integrating AI rise.

Taiwan’s AI Ecosystem Map First Half 2021 is jointly produced by AppWorks and Taiwan’s Artificial Intelligence Foundation (AIF), and is updated every six months. If you have any questions or suggestions, you may reach out to AppWorks at a@appworks.tw.

【If you are a founder working on a startup in SEA, or working with AI, Blockchain, and NFT, apply to AppWorks Accelerator to join the largest founder community in Greater Southeast Asia.】