Taiwan’s AI stock boom is making early-stage startups a harder sell

Taiwan’s AI inventory surge is creating additional ways for investors to gain from its part provision chain, making early-stage startups a tougher pitch.

Taiwan’s benchmark Taiex indicator is up additional than 50% this year, making it the world’s best-performing important index following pulling onward of South Korea’s Kospi.

The gains broaden fine beyond Taiwan Semiconductor Manufacturing Co., spanning part design, advanced packaging, networking, and server companies. About 7% of Taiwan-listed stocks have doubled this year, compared alongside 3% in South Korea.

That wider visibility has made Taiwan a preferred Asian AI trade.

A September Bank of America study established that 35% of prosperity managers expected Taiwan to advantage most from the next phase of the AI cycle, tying it alongside the US. Just 5% chose South Korea.

For startups, the petition of those public-market returns can reshape the backing calculation.

For Anderson Chen, the originator and CEO of Operon Solutions, a Y Combinator-backed manufacturing AI startup, that calculus was part of what shaped how he raised money.

Chen stated he chose to lift Operon’s $700,000 pre-seed chiefly from Silicon Valley investors, leaving area for Taiwanese allies and family to participate.

“The market in semiconductors is fair too good, and you can get 10X returns from the inventory market,” Chen told Business Insider.

In his view, equal a prosperous startup IPO power create lone a two- or threefold come back for investors.

The hunt for a archetypal check

That creates a difficulty for startups trying to build Taiwan’s next generation of winners.

Caleb Chu, an early-stage capitalist and originator of Taiwan-based Nova Studio, which backs young founders, told Business Insider that the inventory rally had drawn many Taiwanese investors toward listed shares and distant from project chief and startups.

Findit, a government-commissioned phase that tracks Taiwan's startup ecosystem, established that kernel and angel rounds made up 38.4% of funding deals by Taiwanese VC firms in 2021. By 2024, their portion had fallen to 17.1%.

By contrast, B- and C-round deals accounted for 39 deals, or 29.1% of the total, in 2024.

Chu stated Taiwanese investors had increasingly preferred B- and C-round and pre-IPO companies, anywhere the path to returns was clearer.

Private-equity finances visage a related, although not identical, pressure. A March study by KPMG Taiwan stated TSMC’s share-price strength had created a “crowding-out effect” for personal funds, as investors preferred liquid community AI stocks complete finances alongside longer lockups and small certain exits.

US project data shows a different, if motionless uneven, mix.

PitchBook and the National Venture Capital Association stated early-stage dealmaking was additional favorable for AI startups than for non-AI peers in the archetypal fourth of 2026. In a distinct report, they established that 87.5% of US project dollars invested in the archetypal fractional went to rounds of $100 myriad or more.

“When you appearance at the data about the world, the earth is leaning toward first phase since investors acknowledge it can create much higher returns. Taiwan is the opposite,” Chu said.

For founders, that can average looking abroad for first backing.

Operon's Chen stated fundraising had rotate into easier general for Taiwanese deep-tech startups seeking abroad capital, helped by Taiwan’s specialized talent and semiconductor expertise.

His startup's $700,000 pre-seed circular closed inside three days.

“It's gotten easier to fundraise in general, but perchance not necessarily in Taiwan,” he said.