Taiwan’s insurers and government funds have typically had a strong preference for bonds, particularly those backed by the US Treasury. But change is afoot as they have started wading further into venture capital (Bloomberg)
Bonds and more bonds normally jump out of the typical investment portfolio of a Taiwanese insurer or government fund. Debt instruments, often backed by the US Treasury, might command more than half of an institution’s investments in dollar terms.
But this year some of the same players are wading further into venture capital, including offshore funds invested in Silicon Valley start-ups.
The then-and-now difference reflects a global appetite for venture capital driven by a growing list of successful startups, the end of a post-pandemic dry spell and the evergreen quest for diversification in Taiwan, according to people who work in venture capital.
“The institutional push into venture capital — particularly by life insurers and corporate investors — is being catalysed by an aligned policy package transforming VC from a capital burden into a strategic, multi-benefit asset class,” said Karen Yu, a former member of Taiwan’s parliament and president of the Taiwanese venture capital firm Industrial Technology Investment Corporation.
Data from AOX sister title MandateWire shows $452.6mn in total venture capital investments or planned investments by Taiwanese asset owners this year through August, across 15 deals, compared to $161.6mn and four deals over the first eight months of 2025.
Most asset owners in both years are Taiwan’s giant life insurers, though the National Development Fund – the mission of which is to foster local start-ups – has jumped in too.
CY Huang, founding chairman of the Taiwan Mergers & Acquisitions and Private Equity Council, said some expect venture capital for AI-related start-ups, particularly those driven by Taiwan’s decades-old strength of tech hardware, to do well.
Taiwan is home to some of the world’s largest semiconductor companies, including TSMC, whose share price has gone up by 79 per cent over the last 12 months, and UMC, whose share prices has gone up by 193 per cent over the same period.
Particular attention goes to US-based venture capital funds targeting hot companies, Huang said. Among these companies are SpaceX and Anthropic.
“Insurance companies traditionally shy away from VC deals, but because of AI and semiconductors they are more willing,” Huang said.
Taiwanese investors have been itching to diversify their exposure anyway, analysts said. They have refrained because of bumps in the economy, asset-liability profiles and in some cases Taiwan government regulations.
"Taiwanese institutions hold massive pools of patient capital,” Yu said.
Policymakers in Taipei, she added, have made venture capital more viable for big investors by creating corporate ESG “scorecards” and halving the risk-based capital charge for institutional venture capital allocations. These changes, she said, helped turn venture investing “from a compliance friction into a dual-yield strategic play".
Government initiatives such as the $31bn National Development Plan, an economic framework aimed at massing private capital for public infrastructure and industrial expansion are “generating bankable domestic pipelines”, Yu added, while reforms passed by Taipei would “reinforce alternative exit mechanisms” for start-ups.
Taipei-based Fubon Life Insurance, one of the biggest venture capital investors so far this year, did not answer a request for information about its interest in the asset class, and fellow investor Cathay Life Insurance declined to comment. Both insurers seldom discuss the reasons behind asset allocations beyond required stock market disclosures.
David Wu, Taiwan partner with the California-based Acorn Pacific Ventures, said major Taiwanese manufacturers such as electronics assemblers Foxconn and Wistron are handing venture capital to domestic start-ups which are strategically good for their core businesses, such as small AI firms.
He said these corporate venture capitalists may aim to use the investee firms’ AI technology “over their chipset solutions.”
Taiwan’s investors also are responding to heightened world interest in venture capital following a pullback in 2024 and 2025, experts in Taipei said.
Inflation, high interest rates and a slowdown in initial public offerings – which would give capital back to investors – hobbled the asset class until this year, when a high concentration of AI capital and non-IPO liquidity mechanisms began driving the market.
Venture capital “winter” is over, Wu said.
Replacing it are AI hyper-scalers, new biotech technologies and favourable AI-related compliance or regulatory tools, said Yvonne Chen, founder of Ceres Capital in Taiwan. She warned that wars, “uncertain geopolitical risks” and “shifting policies” still pose risks.