AI Stock Boom Crowds Out Taiwan Early-Stage Startups
Taiwanese investors are shifting capital from early-stage startups to public AI stocks, forcing deep-tech founders to seek venture funding in Silicon Valley.
A surge in AI-related public stocks is deterring local investors from funding early-stage startups in Taiwan. The benchmark Taiex index has risen over 50% this year, driven by gains in chip design, advanced packaging, and server companies. This rally has created a crowding-out effect, where investors prefer the liquidity and high returns of public markets over the longer lockups and uncertainty of venture capital.
KPMG Taiwan reported that the strength of TSMC's share price has specifically contributed to this shift. Data from the government-commissioned platform Findit indicates that seed and angel rounds by Taiwanese venture capital firms dropped from 38.4% of deals in 2021 to 17.1% in 2024. Investors are increasingly favoring later-stage B- and C-round companies over seed-stage ventures.
As a result, some Taiwanese deep-tech founders are seeking early-stage capital from overseas investors, particularly in Silicon Valley, to avoid the domestic funding slump. This trend highlights a divergence from global statistics, where investors are generally leaning toward early-stage deals to generate higher returns.
