91 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE to 2023, victims of the complex process, fragmented government approach, and limited exit opportunities. To fill the void, angel investors are less stringent than VCs in their capital allocation and prefer to pursue smaller deals. Taiwan does not need to reorient its entire angel capital strategy but rather expand its existing initiatives. Launched in 2018, the NDC’s five-year NDF allocated NT$2B for coinvestments alongside angel investors in start-ups under three years old with less than NT$80M raised (NDC, n.d.). The outcome was 202 investments totaling NT$3.16B in angel funding. According to NDF Executive Secretary Su Lai-shou, since 1973, the NDF has generated more than NT$330B in cumulative total return, excluding TSMC (Lin & Hwang, 2022). According to the StartupBlink (2025) composite index for start-up ecosystems, there are more than 1000 active startups in Taiwan that are driving Taiwan’s current rank as twenty-second globally and fourth in East Asia. Taiwan can enhance angel investment by increasing the NDF budget beyond NT$2B to further bridge the funding gap for more start-ups before they reach the requisite size and growth potential that VC prefers. Reducing barriers to internationalization While government reform and increased angel programs offer temporary relief, geopolitical isolation poses deeper challenges. China’s influence prevents Taiwan from entering the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership as well as the Indo-Pacific Economic Framework for Prosperity, with even the US avoiding actions that might provoke Beijing (Mark & Graham, 2023). Also, Taiwan’s dependence on China for VC and PE investment and hardware, along with its “silicon shield,” are under threat as Beijing expands its domestic chip fabrication to reduce China’s reliance on Taiwan and the US for advanced chips (Mark & Graham, 2023). Taiwan must circumvent these barriers to internationalization to facilitate their start-ups expanding into global markets and attracting global investors. Foremost, Taiwan can expand ASVDP 3.0 to include more industries beyond AI, 5G, satellite, software, chipmaking, and drones. Although the fields attract international VC interest due to growth potential, Taiwan can diversify into biotechnology, logistics, and other spaces to broaden the pool of interested investors. Taiwan can leverage ASVDP 3.0 to establish more international offices, expanding global market access and reducing reliance on limited domestic products. By building connections through international offices in prominent start-up hubs and gaining experience in foreign markets, Taiwanese start-ups will have more insight into the risk-taking process necessary to be attractive to these markets and generate the potential returns these international investors seek. Moreover, as the US–Taiwan Business Council suggests, Taiwan has already created a technological powerhouse via partnership alliances with Hewlett-Packard, Apple, Dell, and other leading companies. It now needs to leverage these advantages for global PE companies to truly succeed (US–Taiwan Business Council, 2020). Taiwan’s potential to reorient the economy In conclusion, Taiwan stands at a critical economic juncture. While it has achieved significant growth on the back of its semiconductor industry, overreliance on this sector amid fraught relations with China threatens continued progress. To secure its economic future, Taiwan must diversify into the space with the highest potential for its economy, the start-up and VC ecosystem. During such a pivotal transitory period that can reposition Taiwan as an economy of the future, better coordination and resource allocation by the government are critical to ensure a smooth adjustment for the start-up sector, domestic VC and angel sectors, and global investors. The government has recognized this need over the past several decades and rolled out initiatives, such as ASVDP 3.0, a start-up–dedicated NDF, and Startup Island TAIWAN. However, these efforts have been hindered by fragmented bureaucracy, restrictive investment laws, and ever-widening funding gaps for start-ups at their most critical stages. Even more, Taiwan’s growing isolation from global markets and institutions complicates its path forward. While Taiwan’s limited international access is the product of external geopolitical pressures, internally addressing inefficiencies within its start-up ecosystem remains a vital area of sovereign agency that can drive meaningful change. To overcome these challenges, Taiwan can leverage its strong existing infrastructure to streamline government support for start-ups, foster domestic angel investment, cultivate a culture that embraces risk and innovation, and actively promote collaboration with foreign investors. A coordinated near-term government effort across these facets promises longterm benefits for the Taiwanese economy and people. Ultimately, Taiwan’s ability to adapt and innovate amid unique geopolitical constraints will determine its economic trajectory.
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