Return Targets for Taiwan’s VC Industry: Good, but They Could Be Better

Originally published 2021-11-01Robin’s commentary (following an industry commentary article)

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Collected in Robin Shen’s Field Notes · Content type and attribution are shown above

English translation of the Chinese post originally published 2021-11-01. Translated 2026-10-23 with AI assistance. Historical figures and claims have not been updated or independently verified. 中文原文

Reading guide

Venture investing has two kinds of mistakes: backing the wrong venture and losing the principal, or missing a venture and forgoing substantial upside. Ordinary VCs worry about backing the wrong companies; top VCs worry more about missing them. If just one company in a portfolio delivers a 100-fold or 1,000-fold return, the others can fail without ruining the outcome, greatly increasing tolerance for failure. By contrast, a creditor-like focus on protecting principal leads only to low returns and does little to encourage innovation. For Robin, the challenge and appeal of the industry lie in continually learning, accepting new challenges, and refining investment logic through both bad investments and missed opportunities. He urges Taiwan’s VC industry to be more ambitious: an internal rate of return of 15–20% is good, but higher targets can inject fresh momentum for innovation and progress into Taiwan.

Key points

There are two investment mistakes: backing the wrong company and missing the right one. Top VCs worry more about missing opportunities.
The logic of outsized returns: one 100-fold or 1,000-fold investment can offset the failures of the others.
A creditor-like mindset leads only to low returns and stifles innovation.
Robin’s hope for Taiwan’s VC industry: raise its ambitions and help drive industrial innovation.

Trees at different stages of growth with connected roots on cream paper, suggesting patient cultivation and lasting value. — Venture capital & investmentThematic illustration · AI generated

Full text — English translation

Venture investing has two kinds of investment mistakes: 1. Backing the wrong venture and losing even the principal. 2. Missing a venture and forgoing substantial upside. Ordinary venture investors worry about backing the wrong ventures, while top venture investors worry more about missing them. Suppose a portfolio invests 100 million in each of 10 companies. If one delivers a 100-fold or even 1,000-fold return, it does not matter if all the others fail. The tolerance for failure can therefore be much greater. By contrast, if you worry about principal the way a creditor does, you can only trade that for low returns. Tolerance for failure will be extremely low, and innovation cannot be encouraged. What makes venture capital so challenging and interesting is that you have to keep learning and growing, sharpen your investment thinking, and be open to new challenges. Through both wrong investments and missed opportunities, we find our direction and refine our investment logic. From my perspective, Taiwan’s venture capital industry needs greater ambition. An IRR of 15–20% is good and deserves applause. But we can aim higher. By setting and pursuing more ambitious goals, we can inject momentum for innovation and progress into Taiwan.

These articles are personal notes, book excerpts, and collected reprints. Figures and events reflect the time of the original publication, are not current information, and do not constitute investment advice.

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