Taipei: Venture capital for local dot.coms in Taiwan has all but dried up but local venture capitalists (VCs) still have plenty of cash to throw at the Internet, industry experts say. "There's an enormous amount of venture capital money available in Taiwan but there seems to have been a shortage in deal flow," said Teco Group fund manager Christian Stillmark who will start spending around $30 million in venture capital funds aimed principally at the Taiwan market in October. "Portals and dot.coms are out and good Internet and technology-related companies are hard to find," he said in a recent interview from his Taipei office. "It's a very competitive environment both for the companies needing the cash and for the VCs who need the best deals." Teco Group is the parent group of Teco Electric & MachineryCo Ltd, one of Taiwan's major electrical companies.String of scares
Deal flow between VCs and business-to-consumer (B-to-C) start-ups has ebbed following a string of scares, including pessimistic revenue forecasts for Internet retailer Amazon.com by several influential analysts.
At last Friday's closing price of $36, Amazon shares had shed 57 per cent from an intra-day high of around $85 on February 3.
"There are very few deals going into B-to-C or dot.com ventures in Taiwan now. That's a sure way to burn your pockets. Even Amazon has been hit," said San Francisco-based CM Shih, head of venture capital operations at Global Chinese CyberCapital Group. Shih, who spends a third of his time in Taiwan, said most local venture capital firms had emerged unscathed from recent B-to-C woes as they had funded personal computer (PC) related or communications start-ups in the last four to five years. But some of Taiwan's biggest companies who had financed B-to-C projects were feeling the pinch. "Large corporates which got involved with B-to-C ventures like those involved with Kimo.com or Yam.com are probably regretting because these entities may not have good revenue models," said Shih, referring to two of the island's top Web portals. "Local VC firms must feel quite pleased they never got involved in the first place."
Internet in focus
Taiwan venture capital firms were still putting at least 50 per cent of their funds in Northern California and the other 30 to 40 per cent in local semiconductor or personal computer-related ventures, according to Shih.But there were still plenty of opportunities in other Internet-related fields in Taiwan.
"We're looking at Taiwan from a different angle as we have experience of watching e-commerce plays in the US," said Shih who will soon manage $100 million worth of new venture capital funds aimed at the Greater-China market in Taiwan, Hong Kong and mainland China.
"What we're looking for is unique e-commerce solutions or innovative new technologies that can be applied to the service industry.
"In Taiwan this would mean helping old economy industry leaders like players in the travel business harness their potential online," Shih said.
More opportunities could be found in business-to-business marketplaces for the sales of DRAM and hard drives, key exports for the Taiwan market, Shih said.
Stillmark said TECO's investment model for technology ventures was broad, encompassing telecommunication hardware and infrastructure, information technology software, multimedia and entertainment.
-- Reuters
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