Since its establishment in 1961, the Taiwan Stock Exchange (TWSE) has witnessed the vigorous development of Taiwan’s industries from traditional industries in the early days to the current semiconductor, electronic technology, and biotechnology medical industries, and nurtured world-class enterprises including TSMC, Foxconn, and MediaTek. With the advent of the AI digital age, Taiwan’s capital market also needs to keep up with the times and make adjustments to meet the needs of enterprises of new forms.
The key to this transformation was in December 2015, the presidential candidate Ing-Wen Tsai at that time proposed the policy of “assisting startups in utilizing the capital market in their early stages” at the “Invest in Taiwan Summit Forum 2015” jointly organized by the Equity Investment Association and the Taiwan Venture Capital Association. This vision was officially realized in July 2021, when the TWSE launched the Taiwan Innovation Board to create a new fundraising platform for startups.
The establishment of the Taiwan Innovation Board has brought about two major breakthroughs. Firstly, the Taiwan Innovation Board innovatively adopted “appraised value” as the listing standard, breaking away from the traditional mindset of relying on physical assets for listing on the TWSE or TPEx. This change is particularly beneficial for innovative technology companies, allowing them to list directly on the stock market in a light asset manner with the appraised value driven by innovation value. Secondly, the TWSE demonstrated for the first time the courage to make independent judgments, and no longer required the Industrial Development Bureau (now known as the Industrial Development Administration) to issue a technology industry opinion letter, thus allowing unprofitable companies to be listed. This demonstrates the TWSE’s move towards a more confident new milestone.
The establishment of the Taiwan Innovation Board responds to the needs of the digital age. Under the trend of Software Is Eating the World, Taiwan must provide a more suitable development environment for emerging industries such as software, networking, and AI .The establishment of the Taiwan Innovation Board is aimed at assisting enterprises with key technologies, innovation capabilities, and innovative business models to enter the capital market early.
However, there are still some limitations in the initial launch of the Taiwan Innovation Board. To protect investors, the TWSE has set a threshold for the Taiwan Innovation Board concerning the qualifications of investors; this has led to a small trading volume which deterred many new startups.
Since taking office, President Lai has actively promoted an economic miracle driven by innovation, assisted the development of the five major trusted industries, and set policy goals to strengthen investment in new ventures. The Financial Supervisory Commission is also actively promoting the establishment of an Asia Pacific Asset Management Center with Taiwanese characteristics, with the aim of creating a capital market that can attract international startups to list in Taiwan. The listing conditions of the Taiwan Innovation Board, which use appraised value as the listing criteria, are in line with the trend of international innovative capital markets, and are the most suitable sector to lay the foundation for the Asia Pacific Asset Management Center.
The author once analyzed that among Asian countries, Taiwan has the capital market that understands technology the most, and the center of the global semiconductor industry chain is also in Taiwan; Taiwan’s capital market already has the qualification to attract international innovative startups. Under the plan of integrating the Asia Pacific Asset Management Center with Taiwanese characteristics, the Taiwan Venture Capital Association suggests that the TWSE develop the Taiwan Innovation Board into an international-level sector. The TWSE and the Taiwan Venture Capital Association have repeatedly discussed and continuously listened to suggestions from all sectors, and finally decided to completely lift investor qualification restrictions next year. This not only demonstrates the confidence of the TWSE, but also injects new vitality into the Taiwan Innovation Board. It also sets a new benchmark for the Taiwan Innovation Board to move towards international development.
The Taiwan Innovation Board will no longer be just Taiwan’s Innovation Board, but also the Taiwan Innovation Board for Asia Pacific innovative startups!
For startups, entering the capital market early has multiple benefits. In addition to enhancing corporate visibility and attracting outstanding talents, it is possible for the company to expand outward through mergers and acquisitions, and break through the size limitation of the Taiwan market. The continuous optimization of the Taiwan Innovation Board will provide a better development platform for such companies.
Looking to the future, the Taiwan Innovation Board is expected to become Taiwan’s NASDAQ which will not only attract local innovative enterprises, but also attract outstanding Asian and global innovative enterprises to come to Taiwan for listing and financing, thus laying the foundation for Taiwan to build an Asian asset management center. With the lifting of investor qualification restrictions, the Taiwan Innovation Board will become a more dynamic and efficient capital market sector to provide a solid support for Taiwan’s innovative and entrepreneurial enterprises to expand internationally and globally.