||Venture capital is a type of investment that provides funding capital to high-potential and newly risen companies and usually is not in the interest of running the company on a continuing basis. The venture targets include non listed companies that might need merger and restructure activities to improve their operation, and the purpose of the venture is to generate long term capital gains. It is deemed a high risk and high return type of investment.
Since its introduction in 1984, venture capital industry in Taiwan had raised over 170 billion NTD for more than 12,000 venture targets. The capital indirectly brought in through venture capital in Taiwan had accumulated to 2.4 trillion NTD, equivalent to 19% of Taiwan’s GDP of 2007. At the end of 2007, nearly one out of two high tech listed companies in Taiwan had obtained venture capital investment. Thus it is clear that the venture capital industry had made great contributions to the early-stage and newly risen high- tech sector and Taiwan’s economic growth as well.
However due to the negative impacts from the global recession and the domestic political and economical environment changes, the venture capital industry had been confronted with fierce challenges, such as fund raising difficulties, limitations on investment targets, cancellation of tax deduction on investment, globalization tardiness etc.
Furthermore, for the past two decades, Taiwan’s venture capital industry had focused its investments on local market. As to the global markets, only the US market had been reached due to its emphasis on R& D in the high tech sector.
In recent years, many global venture capital companies had made investments in Mainland China, while Taiwan’s venture capital sector missed out the good timing to invest or failed to cooperate with global peers due to strict domestic regulations and the prolonged government approval process.
With the attempt to solve the difficulties confronting the venture capital sector, we suggest that the related industry policy and regulations should be improved and liberalized to provide necessary resources for the sector development. The industry itself should follow corporate governance, work on new and innovative operation models, and look for regionalization and globalization through industry consolidation and integration.