Taiwan should distribute its startup development funds to local governments rather than dictate which city or area of the country should drive entrepreneurial initiative, according to William Bao Bean, Managing Director of Mobile-Only Accelerator (MOX), the Taipei-based accelerator focused on helping mobile app startups enter emerging markets.

Under the auspices of MOX, Bean recently hosted 24 representatives from various Taiwan governmental entities, and advised that Taipei track how successfully funds are deployed at a local level and allocate further funding accordingly. The view appears at odds with the government’s current, top-down initiatives such as Asian Silicon Valley and the Taichung smart machinery cluster.

“They were very open and asked us to give them a list of issues that we have encountered in setting up a global startup center [like MOX]. We’ve delivered a list of seven, and we are finding new ones every day,” Bean said, adding it remains to be seen whether the government heeds the advice.

Bean, one of Taiwan’s most successful investors in the early days of the internet with General Mobile Corp. (GMobi), was speaking on the sidelines of MOX Demo Day 2, which saw eight start-ups from around the world pitch to investors for funding worth between US$500,000 and US$8 million.

MOX is a mobile-first, mobile-only accelerator, one of eight under SOSV, a US$300M venture fund known for its industry specific accelerators, including HAX and HAX Boost for hardware, in Shenzhen and San Francisco respectively, and Chinaccelerator for internet startups, based in Shanghai. MOX aims to provide a bridge for global startups to reach what Bean calls “the last 4 billion mobile-first users,” following on from the first billion in China. Through its partnership with GMobi, which offers smartphone ad services and a payment platform, MOX offers its startups access to 130 million smartphone users across South Asia, Southeast Asia, South America and Eastern Europe – crucially without having to splash the cash on Google and Facebook adverts.

“The number one problem in global mobile startups today is that they spend their money not on creating great products, not on hardcore engineers but on Google and Facebook ads,” Bean said. “They have created walled gardens where it does not matter how much people love you, how good your product is - virality is dead and no one will ever see your product unless you pay.”

MOX is also the first global accelerator to base itself in Taiwan, and the first venture capital fund to come to Taiwan without government support. While AppWorks runs a similarly positioned offering that draws on funding from primarily Taiwanese companies as well as the government, few are better qualified than Bean to offer views on how Taiwan can make it easier for global startup operations like MOX to locate here.

“There are a number of barriers that make it difficult to set up – it’s not tax efficient,” he said. “Usually when you go into a third world market you have to pay an agent to help you set up – Taiwan is not a third world market but you still have to pay an agent and it takes two months. Taiwan has a large number of regulations that have been on the books for 40 years to solve problems that aren’t relevant to today’s economy.”

Another example is how difficult it remains for a company that has taken Chinese investment to set up in Taiwan. “It’s a very sensitive area, but practically speaking, in 2015 U.S. venture capital funds invested $72 billion, Europe was $12.5 billion. China was $60 billion. So Chinese investors are investing globally, and if Taiwan continues this regulation they will practically block any global startup of any significance from ever setting up here [because] some of them are bound to be Chinese.”

Last year the Minister of Economic Affairs Lee Chih-kung (李世光) said the government is attempting to find a middle ground amidst pressure from companies such as MediaTek for it to lift a ban on Chinese investments in Taiwan’s IC sector. Remove the regulatory hurdles and there are plenty of salient reasons why Taiwan can compete as a center for startups in the region, according to Bean.

“It’s inexpensive to set up, the talent is good and English is widely spoken. Hong Kong is way too expensive and you can’t hire people, and the same goes for Singapore,” he said. “Thailand has communication issues [despite] a burgeoning startup scene. Kuala Lumpur and Jakarta are just developing and also have setup communication issues.”

As a case in point, MOX has so far had two companies relocate to Taiwan as a result of being introduced to the island through MOX, Bubbleeye from Beijing and Migme from Singapore. A third is on the way.

MOX seeks companies that have 15 percent to 20 percent user retention over a month – a strong indicator that they have an enamored userbase. It takes 6 percent of a startup's common stock and operates a revenue share model. In addition to investment and assistance with user acquisition, MOX runs a global mentorship program, something Bean sees as a crucial component that is currently lacking in Taiwan.

“One of the major problems with the Taiwan ecosystem is that successful Taiwan entrepreneurs in the past have been focused on the West, then moved to the West and never came back,” he said. “There’s a scarcity of mentors in Taiwan to help with international expansion to the West.” MOX mentors include the CEO of AppAnnie, a tool used by over 1 million apps to chart their positioning in app stores.

As to when a Taiwanese startup might join the MOX program, Bean says he has made five offers so far, none of which have been accepted, in part because MOX’s stipulations mean a Taiwanese startup is likely already profitable and backed by venture capital reluctant to take 6 percent dilution.

“We [SOSV] are the number one investor in the world in hardware according to TechCrunch, so we are starting to take Taiwan companies global on the hardware side. But on the internet side we want to bring our global mentors in and spread the knowledge, hopefully one day we will have a Taiwan startup in the MOX program.”

Editor: Edward White