I'm currently on an trip to Asia visiting operational partners, potential investors and startups for Hardware Club. Since my schedule is very much packed, the posts during the trip would come in short forms – but maybe the readers of this blog actually prefer this?
My first stop is my hometown Taiwan, where I had worked 10 years including 4 years as an entrepreneur. The general impression so far is that the gap between the venture investments in Taiwan and US remains considerable. The notion of the necessity of disruption in a low-GDP-growth country, such as that of Taiwan, still sounds airy and suspicious to potential LPs. In fact, I was expecting this coming in and wasn't all that surprised. As a VC we have to be forward-looking and unapologetically positive and this applies to both toward entrepreneurs and toward LPs. It's our job to communicate this clearly in the process of fund-raising and deal-sourcing.
On the operation side, everyday I'm feeling more confident and excited in our ability to help our member startups solve the most critical problem in their scaling process: manufacturing.
Taiwan has always been hardware-central and despite the fact that the vast majority of factories are in China, the big OEM/ODMs – Foxconn, Pegatron (ASUS), Wistron (Acer), Quanta Computer, Compal Electronics, Inventec – are all Taiwanese. And as the profit margin of their mass-volume business tumbled from the low two-digit in early 2000's to now less than 5%, many are looking for a way to diversify to differentiating high profit margin products. The effort comes in many forms and I'm now confident that we could build strong connections with several trustworthy and competent Taiwanese ODMs that are perfect for our Hardware Club members. This is gonna be exciting for all of us!