Development fund expands coverage

The policy adjustment addresses a practical challenge for Taiwanese AI startups that seek international funding and market access. By establishing offshore entities while keeping operational and R&D bases in Taiwan, these companies previously fell outside the NDF's direct investment criteria. The amendment acknowledges this common structure, aiming to prevent a loss of domestic investment opportunities for companies still deeply rooted in Taiwan.

The new rules define 'Taiwan-affiliated' offshore entities by specific thresholds: R&D headquarters in Taiwan, over 50 percent of R&D budget spent locally, over 50 percent of employees recruited from Taiwan, and over 50 percent of total revenue generated from Taiwan-based offices. These criteria aim to ensure that public funds support companies with substantial economic ties to the island, even if their legal structure is international.

This initiative reflects a broader strategy to foster the growth of Taiwan's AI sector by collaborating with private venture capital firms, accelerators, and corporate venture capital investors. The goal is to scale up startups, expedite their path to public trading, and facilitate their entry into international markets. The inclusion of offshore entities is a logical extension of this strategy, recognizing the global nature of startup funding and expansion.