Term Sheet Bootcamp Creates Conversations in Southern Taiwan and Connects Resources Throughout Taiwan
From May 6th to May 7th, Taiwan Startup Stadium (TSS) held its annual signature event Term Sheet Bootcamp (TSB) in Startup Terrace Kaohsiung. Each year, TSS invites real venture capitals (VCs) as speakers to teach startups on preparations of term sheets from the investors’ perspective. In the past 5 years, TSS held more than 10 TSB in 4 countries, invited more than 70 international investors as speakers, and educated more than 400 students. To promote the development of startup industries in southern Taiwan, Startup Terrace Kaohsiung was established last year. By taking information and investors into Kaohsiung, TSS hopes to create more conversations and connect resources throughout Taiwan. Mason Yu, the Branch Chief of the American Institute in Taiwan (AIT), also came to the event to communicate with the startups in person.
This year, 30 startup teams were selected to join the Bootcamp, and many of them were local teams in Kaohsiung. This time, TSB was organized by TSS and BE Capital Ventures, and co-organized by Startup Terrace Kaohsiung, 500 Global, SPARK, and Kaohsiung Medical University Innovation Incubation Center. The two-day TSB covered 6 keynotes, 3 fireside chats with investors and entrepreneurs, 2 investment role-plays, small class discussions, one-on-one investor meetings, and legal and financial consulting to equip startups with the necessary knowledge when it comes to fundraising and the ability to accurately grasp the core key of the agreement when received term sheet offerings.
Throughout the course of the Bootcamp, 40 one-on-one mentor office hours were held, including several sessions jointly held with 500 Global, enhancing startups’ chances of getting accepted into international accelerators.
The topics of the 3 fireside chats with investors and entrepreneurs were “Key to BlitzScaling Your Team”, “How VCs, Corporations, and Accelerators Identify Good Startups”, and “Identifying and Executing Exit Strategies”.
In “Key to BlitzScaling Your Team”, the speakers came to the conclusion that the early stage for startups is nothing more than identifying markets, enhancing product value, and maximizing the use of limited funds by spending it where customers can tell a difference. “Startups will always have financial needs, so knowing the company’s status, finding ways to stay in operation, and using the least resources to achieve maximum growth are the most important. When facing a new market, the decision-maker should assume the initial capital to be large, to determine the runway and prioritize accordingly. When the business is not growing as expected, the team must make adjustments immediately by repeating the steps above steps to convince the internal team and external investors. When in short of funds, move on to the next round”, Kenny Su, Founder of Kdan Mobile shared. It is important to not let ideals outweigh risks on entrepreneurial journeys.
In “How VCs, Corporations, and Accelerators Identify Good Startups”, three speakers from different venture capitals all said that an ideal investment target requires a good founder who can listen to and digest suggestions, one with excellent logic and is willing to interact with investors. “Because VCs need to make investment decisions within a month, investors usually look at market size, executive team, and user growth to make judgments. Among them, the executive team is more difficult to ‘figure out’ in a short amount of time, so investors tend to focus more on market size and user growth. The proportion of unicorns within the industry overseas can also help investors deduce whether there are market growth opportunities; if there are many unicorns within the industry, more development opportunities are inclined”, said Shawn Chu, 500 Global Principal. Take the Taiwan market as an example, “Taiwan teams are generally pragmatic and provide more reasonable valuations, so it’s easier for international investors to buy into them. Due to its superior geographical location, Taiwan has advantages in talent acquisition and raw material supply chain. It’s a good testbed for startups to market expand with a lower cost”, added Angie Wei, Vice President of CDIB Capital Group.
Talking about the key points to pay attention to when signing term sheets, the three speakers of “Identifying and Executing Exit Strategies” concluded: the founder should have a good understanding of the market and products, and then provide a reasonable valuation by analyzing the PE/PS value of each company within the industry. Carota CEO Paul Wu analyzed, “Experienced investors can generally tell in the first round of startup’s pitching already — the founder needs to be able to frame the potential market size (Total Available Market, TAM) and then propose a reasonable valuation. For example, if the company has a valuation of US$ 30 million, it must be able to prove that the TAM is large; if the target market is Taiwan, then the TAM needs to be between NT$ 3 billion and 5 billion; if the target market is the global market, US$ 1 billion worth of TAM is more reasonable. VCs often take the reverse calculation approach”.
This year’s offline TSB has officially come to an end, but the online course will remain open for the public to take and watch on Startup Island TAIWAN YouTube Channel and Udemy. TSS will continue to connect resources across Taiwan and take part in strengthening Taiwan’s startup ecosystem.
