The TWSE recently released the most exciting news since the opening of the Taiwan Innovation Board, and it is expected that the restrictions on qualified investors will be fully lifted early next year (2025). This development has provided a boost to several digital startups that are currently on the sidelines or preparing for their initial public offerings (IPOs). From the decision made by the TWSE, I also saw Chairman Sherman Lin’s determination to promote the development of the digital cloud industry and the new economy for the construction of a new shield for national defense.
The Taiwan Innovation Board was established in 2021 to provide a convenient pathway for digital startups to enter the capital market early. Since its inception, the TWSE has continued its active relaxation of relevant regulations and established a financing environment that is more in line with the needs of digital startups. I also represented the Taiwan Internet and E-commerce Association (TiEA) to contact Chairman Lin many times for advice and suggestions. Under the efficient promotion of Chairman Lin’s team, a new category of digital cloud industry was officially added in 2023, and the TWSE also worked together with TiEA several times to promote relevant plans for the development of the digital cloud industry.
The Taiwan Innovation Board’s complete elimination of qualified investor restrictions is expected to effectively enhance the liquidity of the board with a substantial expansion of investor base, allowing Taiwan Innovation Board companies to jointly enjoy the world’s 9th largest capital market in terms of transaction value together with TWSE listed companies. Moreover, to enhance the value of innovation characteristics, the Taiwan Innovation Board will adopt measures such as hiring external independent experts to assist in the evaluation of innovation, and strictly selecting innovative enterprises based on various innovative industry attributes, in order to promote the Innovation Board to become a high-quality sector.
With the lifting of qualified investor restrictions, the trading volume of the Taiwan Innovation Board will be expanded to give confidence to digital startups with high valuations and intentions to enter the capital market, and incentivize more new IPOs and improve market turnover. Furthermore, the addition of the digital cloud category has already made a positive and substantial impact on market participants, such as an increasing number of research and analysis reports in the market, and a large amount of attention from domestic and foreign investors. This is also a major advantage for many high-quality digital startups to enter the capital market.
Compared with the past, digital startups listed on the TWSE now enjoy home advantage and the benefits brought by the home market. Digital startups need to choose favorable and suitable locations for their IPOs, and now the Taiwan capital market has diversified listing channels for different stages of company development and provides flexible and comprehensive financing options, which further enhance the attractiveness and market support to domestic and foreign digital startups entering the Taiwan capital market.
The digital economy is sweeping the globe, and over half of the top ten companies by market capitalization are companies in the digital service industry. However, this is not yet the case in Taiwan. Therefore, TiEA’s vision is for 100 companies to issue their IPOs in the digital cloud category in the future. Government policy support and the capital market are keys to the advancement of the digital cloud industry, and the government has formed three important strategies, including the establishment of the “Ministry of Digital Affairs“ to promote industry development, the selection of leading companies through “NEXT BIG,” and the addition of the “digital cloud” industry category in the capital market to accelerate the transformation of Taiwan’s digital economy and the development of its digital industry.
The direction of the government’s three strategies is correct, but the operation needs to be more thorough, and the speed needs to be higher, with the results that can only be seen 8 or 10 years later accelerated to 5 years later. Although Taiwan’s wafer industry is its strong point, the market value ranking of the digital service industry should not lag behind, and its future scale will be 1 to 2 times larger than it is now.
The lifting of qualified investor restrictions by the Taiwan Innovation Board this time is a great leap forward, which not only enables more digital startups to stay in Taiwan, but also attracts international high-quality digital startups to converge in Taiwan. We believe that with the assistance of government policies and the capital market, Taiwan’s digital cloud industry will catch up in the near future and become a new shield for national defense.