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.

2020 has finally come to an end. Although the world is still shrouded in the shadow of the black swan event of COVID-19, the crisis has reached a turning point. As the pandemic continues to affect all parts of the world, many organizations, companies, and startups have turned to big data and AI to transform and optimize the efficiency of business activities, directly accelerating the overall development of the AI industry. According to IDC’s report, the global AI market in 2020 will amount to US$ 156.5 billion, with a growth rate of 12.3%, of which 80% will be attributed to software. IDC also optimistically expects that the market size of the AI industry, considered by some as a blue ocean, will compound at an annual rate of 17% and exceed US$ 300B by 2024.

For various AI initiatives and applications to flourish, data centers must be fully developed to support the storage of data and training models, brain-like IaaS (information-as-a-service), and PaaS (platform-as-a-service) cloud services. After meeting the performance requirements of AI for cloud services, data in various fields such as finance and manufacturing can be used more efficiently to accelerate AI technology.

It should then come as no surprise that leading international cloud players such as Google and Microsoft have recently announced their intentions to deepen their investments in Taiwan’s AI Infrastructure. Last September, Google unveiled that it would build a third data center in Yunlin, while Microsoft disclosed at the end of October that it would set up its first Azure data center in Taiwan. As Taiwan’s future cloud infrastructure realizes, developers will no longer need to build services through overseas data centers, which will accelerate AI innovations and applications by local teams, especially in areas that are more sensitive to data sovereignty, such as finance.

Every 6 months, AppWorks releases an updated Taiwan AI Ecosystem Map, distilling the latest trends and developments while highlighting various companies leading the charge. In the process of reviewing the overall ecosystem changes, we have observed the following trends in the second half of 2020.

AI in healthtech has attracted investors’ attention 

Although the pandemic has negatively impacted economic productivity and overall investor appetite, it has unequivocally accelerated the adoption of AI innovation in healthcare.  Despite the rather barren investment landscape in the first half of 2020, aetherAI, which provides medical imaging AI development services and AI digital pathology systems, managed to close a  US$ 6M series A round led by Quanta Computing. In the second half of 2020, Deep01, which assists medical staff in interpreting computer tomography (CT) and provides an AI image interpretation system for cerebral hemorrhaging, successfully raised NT$ 80M (US$2.7M) in seed funding led by ASUS Capital. In addition, Heroic-Faith, which pioneered innovative medical devices such as an AI stethoscope and a smart respiratory monitoring system, also completed a US$ 4M series A round of fundraising in 2020.

Moving forward, the next step for Taiwan’s healthtech and AI industry is to go global. As the main markets for medical AI-related products are still focused in developed countries like the United States, Japan, and Europe, Taiwan’s visibility coupled with the impact of the pandemic will have an effect on an international scale. Whether these innovative startups can successfully go overseas to scale will become the focus of attention in the future.

Corporates are accelerating their search for transformation and collaboration opportunities in startup circles

For many traditional Taiwanese companies, big data and AI have been at the crux of their digital transformation initiatives and overall search for the next growth engines. In 2020, Commonwealth Magazine and Europe’s IMD jointly released the first digital transformation survey between Taiwan and Europe. It pointed out that up to 52% of Taiwanese companies have not yet been digitally transformed, and only 4% of companies achieved or exceeded their digital transformation goals. Whether it’s in-house big data and AI project teams or looking for partners in the startup world, it has become the newest goal for companies to innovate.

The most direct model is creating corporate venture capital (CVC) arms to invest in new ventures with strategic value. In addition to investment, Taiwan’s major companies are also exploring other collaborative models. For example, one of the world’s leading manufacturers of IoT systems Advantech worked with StarFab to establish an accelerator. Wistron, on the other hand, not only promotes upgrading the industry through partnerships with startups but also actively lays out future transformations. They collaborated with NCTU to establish embedded AI research centers, and jointly planned Wistron Lab @ Garage+ with Chia Hsin Cultural Foundation and Times Foundation to find growth opportunities in the next decade.

Taiwan’s AI ecosystem is bolstered by the successful prevention of the epidemic

Due to the success of the Taiwan government and all citizens and residents in fighting the pandemic, Taiwan’s AI ecosystem continued to flourish in the second half of 2020. On the startup accelerator side, AppWorks Accelerator has been recruiting specifically for AI startups since August 2018, fostering a total of 84 teams from both inside and outside of Taiwan. Other community partners such as Microsoft for Startups, SparkLabs Taipei, and Taiwan AI x Robotics Accelerator also recruited a number of AI-related startups to inject new energy into Taiwan’s AI ecosystem. In the second half of 2020, due to the proper control of the coronavirus, it was relatively safe to host physical events in Taiwan. The largest startup event 2020 Meet Taipei showcased many startups using AI and big data to create more value-added services. 

Taiwan AI Academy, Taiwan AI Labs, and the Artificial Intelligence Foundation are Taiwan’s representative institutions in the field of AI education and research, and continue to inject talent and innovative technologies for the development of AI in Taiwan. With the support from the government, institutions, and overall ecosystem, Taiwan can continue to promote the implementation of AI in various industries and integrate innovation into traditional businesses. This gives an opportunity for startups to leverage the resources that Taiwan can offer and connect with players in the ecosystem that are upgrading Taiwan’s AI capabilities.

Taiwan’s AI Ecosystem Second Half 2020 is produced by AppWorks and is updated every 6 months. If you have any comments or suggestions, please send an email to [email protected].

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

Jun Wakabayashi, Analyst (若林純 / 分析師)

Jun is an Analyst covering both AppWorks Accelerator and Greater Southeast Asia. Born and bred in America, Jun brings a wealth of international experience to AppWorks. He spent the last several years before joining AppWorks working for Focus Reports, where he conducted sector-based market research and interviewed high-level government leaders and industry executives across the globe. He’s now lived in 7 countries outside US and Taiwan, while traveling to upwards of 50 for leisure, collectively highlighting his unique propensity for cross-cultural immersion and international business. Jun received his Bachelors in Finance from New York University’s Stern School of Business.

It’s been one heck of a year, for blockchain especially. The industry hasn’t seen this much excitement since the ICO fervor of 2017. In March 2020, crypto prices saw a significant crash as the global economy entered into lockdown due to COVID-19. Fast forward to the year-end, BTC has reached an all-time high of US$33K on the back of increasing interest from major institutional investors. Meanwhile, decentralized finance (DeFi) has very quickly captured everyone’s mindshare, now with over $18B of total value locked into an ever expanding list of decentralized platforms such as Compound and Uniswap.

They say heroes are often born in a crisis. Well, despite the pandemic, this past half year saw 14 new companies added to Taiwan’s blockchain ecosystem map, indicative of three primary trends currently driving the industry forward.

1. Proliferation of DeFi

The concept of DeFi may be relatively unknown to outsiders prior to 2020, in the same way that BTC was prior to 2017. That’s because it was really only this year that DeFi was thrusted into the limelight. Decentralized lending protocol Compound was arguably the frontrunner of the DeFi craze. Launched in 2018, the platform enables users to collateralize cryptocurrencies and earn interest, while also allowing them to borrow other cryptoassets against the collateral. Algorithms are used to automatically adjust interest rates based on supply and demand, while smart contracts eliminate the traditional need for an intermediary such as a bank. 

Compound was certainly novel in and of itself, but what really helped jumpstart adoption was in June 2020 when it started distributing its native governance token COMP to all lenders and borrowers on the platform. Similar to shareholders of a publicly listed company, token holders are entitled to vote on any changes to the protocol, or sell their tokens on the secondary market for extra returns on top of the interest earned from lending.

The free reward was enough to attract hordes of early users eager to park their crypto in hopes of maximizing yield, otherwise known as “liquidity mining,” allowing Compound to briefly overtake Maker as the leading DeFi project in terms of total value locked-in (TVL). It wasn’t long before the rest of the industry started rolling out liquidity incentives of their own. Decentralized exchanges Balancer and Uniswap each announced distribution of their respective governance tokens to users within months of each other. Both serve as automated market makers that create liquidity pools for users to seamlessly buy and sell tokens, albeit in slightly different fashions.

Similarly, in Taiwan, we saw the launch of Black Hole Swap, developed by AW#21 alumni Hakka Finance, and C.R.E.A.M Finance, started by the founder of both Mithril and M17 (AppWorks is an investor) Jeffrey Huang. C.R.E.A.M repackages the best functionalities of Compound, Uniswap, and Balancer all into one platform, and is now among the top 5 decentralized lending platforms in terms of TVL according to DeFi Pulse.

The DeFi space is relentless. Hacks, forks, “vampire attacks”—it seems like the moment any one project finds some modicum of success, there will be a handful others lurking in the shadows, ready to replicate, iterate, or outright steal the idea right out from under. But it’s still early days for DeFi, and one can argue that this type of competition is natural for such a nascent industry. The hackers, arbitrageurs, speculators, and bad actors will stress test the technology and incentive schemes and fully push them to the limits. Ultimately, only the fittest, the most resilient and practical will be left standing, collectively strengthening the ecosystem as a whole. 

2. NFTs on the rise

Following DeFi, non-fungible tokens (NFTs) have continued rising in popularity globally. Gaming and artwork collectibles serve as the primary use cases so far, no doubt perpetuated by decentralized marketplaces such as Rarible, SuperRare, and Async. There are now fully virtual worlds like Decentraland dedicated to showcasing NFTs. In the offline world, famed auction house Christies recently sold their very first NFT artwork for over US$130,000 back in October 2020. 

The jetsetters of digital collectibles, Dapper Labs (the team behind CryptoKitties, AppWorks is an investor) officially launched NBA Top Shot in mid-2020, with revenues reaching US$2 million by year end. The NFT-powered marketplace allows users to buy and sell “digital moments” captured from NBA games. These moments are then stored on the Flow blockchain, an entertainment-focused protocol developed by Dapper Labs which recently raised US$18 million in a token sale.

In Taiwan, AW#20 alumni Lootex has been a long-time believer of NFTs, creating a decentralized auction house for people to create, buy, or sell cryptoitems. They just recently partnered with startup Eternalink and Spanish winery NEKEAS to create NFTs every time a bottle of the limited edition Eternalove red wine is sold. Meanwhile, Alex Liu, the founder and CEO of Taiwan’s largest crypto exchange MAX mentioned in a recent interview that NFT serves as a critical bridge between the virtual and physical worlds and will be the focus of their development efforts in the coming years.

Riding off the excitement of DeFi, NFTs are clearly growing in prominence, with weekly trading volume nearing US$2.5 million in December, up severalfold from a couple months prior. While collectibles and entertainment have occupied the spotlight, NFTs and their verifiable proof of authenticity have the potential to extend into many other areas including real estate, supply chain, identity verification, and copyright management, and yes, even crossovers into DeFi. Compared to DeFi, however, where Taiwanese startups have gained global recognition, NFTs have received much less interest in Taiwan; but, certainly there’s much more room to play and momentum is already visibly picking up. 

3. Crypto goes mainstream

Although beginning with a rather sluggish start, 2020 was most certainly a win for crypto bulls. Increasing interest and support from major institutions like Square, MicroStrategy, MassMutual, Visa, and PayPal collectively served as a monumental endorsement, helping to push the price of BTC far past its 2017 levels and into a record high of US$33K at the time of writing. Evidently, COVID-19 was a large driver in accelerating digital adoption, boosting confidence in cryptocurrencies like BTC as a safe and reliable store of value. Many countries from China to the US are now exploring the creation of their own central bank digital currencies (CBDC), perhaps in direct response to Facebook’s Libra project, which has since been renamed to Diem to signal its independence and distance itself from the social media giant.

When it comes to crypto investment, although much work has been done under the hood to reduce friction and improve the overall user experience, widespread skepticism and caution is still common among the average retail investor due to the volatility and complexity of the market.

In the second half of the year, we saw several Taiwanese startups working on innovative ways to reduce the entry barriers for new investors. Targeting newcomers with zero crypto investing experience, Cappuu (AW#17) is an easy-to-use crypto wallet that allows users to purchase stablecoins with credit cards and invest in high-yield DeFi products without any gas fees. Recently closing a US$1 million seed round, Steaker (AW#20) is a crypto asset management platform that presents several different predetermined investment strategies based on users’ risk appetite and return profile. Fuly.AI (AW#20) helps investors automate their portfolio allocation and interest collection on crypto exchanges like Bitfinex to maximize returns. 

The pace at which blockchain has been evolving is truly astounding, and the pandemic has likely only turbocharged the development. Given its more conservative nature, Taiwan has traditionally lagged behind the latest and greatest in software innovations. But if its success with DeFi this past year is any indication, Taiwan punches well above its weight when it comes to blockchain, so far matching industry trends stride for stride. If Taiwanese entrepreneurs can continue evolving and iterating alongside the speed of crypto, they will be well positioned to define the next wave of blockchain projects moving into 2021, whether that’s in DeFi, NFT, or otherwise. 

Taiwan’s Blockchain Ecosystem Map Second Half 2020 is jointly produced by AppWorks, Blockcast (AW#14), BlockTempo (AW#16), and Zombit (AW#21). It is updated every six months. If you have any feedback and suggestions, please email [email protected].

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

Izza Lin, Recruiting Master (林于荃 / 招募輔導長)

Izza is a Recruiting Master responsible for advising AppWorks Startups on all talent acquisition matters. Before joining AppWorks, she built a successful early career in headhunting firms such as Rising Management Consulting and Recruit Express, where she specialized in recruiting quality talents for internet and e-commerce companies, guiding hundreds of engineers, product managers, marketers and general managers to fulfill key positions for her clients. In between Rising and RE, she headed Southeast Asia Market for an e-commerce startup, USO HK, where she found her passion for helping small guys break the status quo. Izza received her B.A. in Economics from Washington State University and spent 5 years of her childhood in Myanmar and Cambodia. This diverse background has inextricably contributed to her love for traveling and “wine tasting”.

As a HR consultant for startups, I’m often asked this question by founders. In the early stages of their startup journeys, founders typically spend the majority of their focus on product development or sales and marketing, with recruiting often left as an afterthought. At some point, however, they always arrive back at the classic chicken and egg problem: in order to grow, they need the right talent, but in order to attract and retain the right talent, they need to grow.  To get out of that cycle, I usually advise founders to bulk up their startup’s HR muscle.

There’s certainly no hard and fast rule on when to hire an in-house HR, but generally after achieving product-market fit, there are some rules of thumb around team sizes founders can first take into consideration.

10-15 team members: Resources can be quite limited at this stage. As a founder, you probably didn’t have many issues recruiting the first few employees on your own, but as the business starts to scale and accelerate, the team will also need to expand accordingly. Bringing on outside talent to manage the hiring and onboarding process internally will be critical in preventing HR matters from occupying valuable mindshare. 

15-30 team members: So you managed to get to this stage without hiring any dedicated person to handle recruiting. It still might be wise to bring in someone, as HR expands beyond just recruiting to also include retention. While attrition is quite normal in any startup, retaining an employee (granted they’re performing well) is significantly cheaper than hiring a replacement, which can often waste valuable time and resources. 

30+ team members: If the startup has more than 30 employees and doesn’t have an HR yet, you may need to consider hiring this role as soon as possible. At this size, sourcing job boards, editing job descriptions, facilitating interview and onboarding logistics will likely distract you from more mission critical things such as fundraising, product, or business development. 

HR pains of a scaling startup

Many early-stage founders refuse to hire an HR because they view it as an unnecessary expense, and one that’s more suitable for large enterprises. In reality, many founders are unaware of or substantially underestimate the HR problems and needs they’ll encounter as a startup scales and the team sizes grow: 

1. Recruit specialists vs. generalists. In earlier stages of your startup, you’re likely hiring more generalists that can wear multiple hats due to limited resources. Once your company starts to scale, however, you’ll usually need to divide and conquer, that is recruiting more specialists that can significantly amplify the efforts of each function. For example, full-stack engineers might be more commonplace in fresh startups, who would then gradually be replaced by separate front-end and back-end engineers as the organization grows. 

2. Attracting and retaining talents. This includes everything from building the employer brand and marketing specific job openings to sourcing better quality candidates to adjusting compensation/benefits and work-life balance policies to optimize retention.

3. Regulatory & compliance requirements. Labor laws can be quite complex from country to country. Founders need to stay informed on basic hiring & firing legal frameworks to prevent the company from encountering any lawsuits.

4. Company culture, mission, vision, and values development. Setting the vision, mission, and values is extremely important, as these help create the company’s culture and establish objectives and goals that help employees navigate the organization. Unfortunately, many companies lack these core components in the early-stages as the founding team is usually too occupied with other things. 

5. Performance / OKR / KPI appraisal and compensation structure. Compensation and performance reviews are resource-intensive but nonetheless critical components of any growing startup. 

6. Design effective training and development programs. At a certain scale, a startup doesn’t necessarily need to go outside to seek out talents. Instead, they could facilitate internal training to upskill existing talents and cultivate leaders from within. However, many founders are not experienced in properly assessing employee capabilities and designing training programs for them.

The different type of HRs

So, you’ve started to face some HR issues as your company has grown bigger and have decided to hire a professional to give you some peace of mind. Actually, there are two types of HR professionals that you most often see in early-stage startups.

HR coordinator: This role takes on broader duties and responsibilities, generally encompassing the recruitment, retention, training, management, and development of employees; legal issues concerning employment; and salaries and benefits design. 

Recruiter: Given the critical nature and time intensive nature of talent sourcing, recruiters are often brought in separately to specialize in building a strong pool of candidates for hiring managers to choose from. The scope of their responsibilities include understanding the organizations’ recruitment needs, creating accurate job descriptions, posting job descriptions in different channels, and even attending career fairs or recruiting events to source for candidates. They also conduct the initial screening interviews before passing the candidate along to the hiring manager, while also managing the job offer process and onboarding.  

There’s no doubt you will need an HR professional in your organization at some point. If you have strong hiring needs, and if budget allows, it is best to have at least one HR and one recruiter in an ideal HR team. But if the budget only allows the organization to hire one, then you should try to look for a candidate with a multi-tasking gene—that is an HR coordinator with a knack for marketing and sales, which are critical for acquiring talent in a competitive industry, or a recruiter with solid interpersonal communication skills, which will often be used internally for talent management and development. 

Choosing one or the other is contingent upon the individual needs of each startup. Nevertheless, no founder wants to be brought down by back office operations. Although certainly an investment upfront, hiring a high quality HR professional can actually save a founder a lot of time, resources, and headaches, particularly those on a hyper-growth trajectory.

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

Photo by Campaign Creators on Unsplash