Record Growth, But Not for Most of Taiwan

At the end of July, Taiwan's statistics agency (DGBAS) reported second-quarter GDP growth of 12.92%, bringing first-half growth to 13.72%, the highest since 1976. The full-year forecast was then raised to 11.05%, a 39-year high. The TAIEX has crossed 45,000 points, and international index providers keep raising Taiwan's weighting.

These are thrilling numbers. But look one layer down and a different Taiwan appears.

Take the first quarter. Exports grew 51%, and electronic components and ICT products accounted for 71% of that growth; twelve of twenty-four export categories still shrank. Capital formation grew 15% in the second quarter, again driven mainly by semiconductor equipment. And, most importantly, employment: electronics and ICT employ only 7.7% of Taiwan's workforce.

In other words, more than nine in ten working people are standing outside this wave of growth.

The same question, in room after room

Over the past few years, as an executive director of the Taiwan Impact Investing Association, I have had the chance to sit in many meeting rooms with very different agendas. The association has no commercial activities, which is exactly why people with different positions are willing to sit at the same table.

Sometimes it is a discussion with banks and asset managers about whether the shelf of wealth-management products could include options that can clearly explain "what this money changed." Sometimes it is two generations of a family business talking about what, beyond succession, the family's money is meant to achieve. Sometimes it is academics and professional-service firms comparing international standards, and sometimes it is a regulator's roundtable where we share what we see in the private sector. Through the association's international networks, we also keep exchanging notes on policy design with partners across Asia.

The people in these rooms care about different things. Yet the discussion very often ends up at the same question:

Taiwan does not lack money. But the money is not flowing to where it is needed.

To be clear: this is not a critique of semiconductors

TSMC is a national asset, and its success is one of the greatest strokes of fortune for my generation. What I want to talk about is not the industry itself but the narrowing of resource allocation: what happens to everything else when public finance, capital markets, talent and public attention all tilt in the same direction.

The concentration figures are well known by now: TSMC alone accounts for about 42% of Taiwan's stock market capitalization, and its 2025 electricity use was equivalent to about 10.2% of Taiwan's total annual consumption. Each of these numbers is an achievement. But together they quietly define something: what counts as an "important industry."

Private markets feel the squeeze first

Beyond the association, I also invest in startups and early-stage companies as a partner of Sustainable Impact Capital (SIC). That vantage point shows me something the macro data does not easily reveal: concentration is happening not only across industries, but across markets.

Start with the global picture. Global venture investment in the first half of this year reached US$502.1 billion, already more than all of 2025. But in the second quarter about 70% of that money went to AI, and the number of seed deals fell by nearly 30% in a single quarter. KPMG's figures are even starker: in the first quarter, five AI megadeals absorbed nearly 60% of global venture funding. There is more money, but fewer companies are getting it.

Taiwan's situation deserves a closer look. Full-year 2024 data compiled by the Ministry of Economic Affairs' FINDIT platform show that the number of deals with venture participation fell by nearly 15% in a year, and participation by overseas investors dropped 35%, while deals involving the National Development Fund rose by 30%: the public sector is filling the space private capital is leaving. Corporates and corporate venture arms took part in 70% of deals, and a large share of Taiwan's corporate capital sits inside the semiconductor and hardware supply chain itself. In May, a founder who had already closed a Series A wrote in the press that local investors are highly concentrated in semiconductors and hardware, that application-layer startups "cannot get their first angel check," and that mid-stage Series A and B money is also shrinking.

The excitement in public markets magnifies this squeeze. Taiwan's ETF assets reached NT$7.5 trillion in early August, up NT$3.6 trillion this year alone, with more than 18.5 million investor accounts. When a market-cap ETF offers strong returns and the liquidity to sell at any time, the opportunity cost of persuading an investor to lock money into a ten-year early-stage fund has never been higher. A study tracking some 300 companies listed since 2021 even found that more than half of Taiwanese venture capital's excess returns were realized "after" the companies went public: much of venture capital's own best returns now come from the secondary market.

On the ground in early-stage investing, these two forces combine into something very concrete: startups outside semiconductors and AI hardware (in climate, healthcare, education and social innovation) find it much harder than a few years ago to raise a first and second round. Yet these are exactly the problem-solvers Taiwan will need most in the next decade.

Classrooms and the social-care front line

The same tilt appears in the classroom. Over the past five years, enrollment in high-school gifted language programs fell by 41%, from 907 students to 531. At universities, science and engineering now account for 48.4% of students, up 4.4 percentage points in five years, while the humanities are down to 18.1%. Declining birth rates affect every field, but the shrinking of the humanities is lopsided: students have not simply become fewer; they are being steered elsewhere.

The social-care front line is more urgent still. In April, the Control Yuan formally censured the Ministry of Health and Welfare, citing six major failings in its outsourced social-welfare contracts. Under these contracts, the hourly wage cap for care workers is NT$200, while the market rate runs from NT$250 to NT$500; non-profits make up the difference through their own fundraising, and reimbursements can be delayed by six to ten months.

In a country whose economy is growing at a half-century high, the contracted hourly wage cap for a care worker is NT$200. Put those two numbers side by side and it is hard not to feel that something has gone wrong.

The environment and the humanities face a different kind of gap: the external costs created by success itself are not carried on anyone's balance sheet, and the things nobody notices until they are gone (translation, publishing, local history) do not appear in any line of GDP.

Four kinds of capital, each with its limits

Put all of this together and the same structure emerges: none of these areas lacks people who care; what they lack are suitable capital instruments.

Government budgets face crowding-out, and social-welfare spending cannot keep pace with the size of the overall economy. Institutional investors are bound by fiduciary duty and cannot accept lower returns for a social purpose. Philanthropic giving is limited in total and highly concentrated. Venture capital, which is supposed to carry early-stage risk, is being squeezed from two sides at once, by industry concentration and by the high returns available in public markets.

That does not mean there is no answer. But it reminds us that what is missing is not more money, but a different kind of money.

An underestimated force

Abroad, gaps like these are often filled first by a particular kind of force: capital willing to wait, willing to take early risk, and willing to cross the line between "investment" and "philanthropy." Internationally it is called patient capital, or catalytic capital.

It takes more than one form. In the United States, foundations put part of their endowments into mission-related investments; the Ford Foundation once committed up to US$1 billion. In Singapore, the government uses policy incentives to steer family offices toward climate and blended finance, and the Philanthropy Asia Alliance under Temasek Trust has gathered commitments of more than S$1 billion. In Japan, financial institutions and public pension funds entered the market together at the regulator's convening, pushing impact investment to ¥18.65 trillion.

Families, foundations, corporates, financial institutions, public funds: the funders differ, but the role they play is the same. They go first where the market is not yet willing to go.

The value of this force lies not in its size but in its nature. An early-stage fund has to explain to its investors why they should not simply buy an ETF; a funder who is clear about what it wants to make happen, whether a family, a company or a foundation, does not.

Taiwan needs this force too

I believe Taiwan needs it as well, and its starting conditions are not bad at all.

Taiwan has an industrial density rarely seen anywhere in the world. Family-office research from an industry-academic partnership between CTBC and National Chengchi University notes that more than 70% of listed companies are family businesses, and more than 90% of unlisted companies are. Taiwan has companies setting sustainability commitments and supply-chain decarbonization targets; large financial and insurance pools looking for sustainable allocations; and public co-investment that the National Development Fund and ministry funds have already begun to try. What these players hold is not only capital but industrial capability, customer relationships and distribution, which are exactly what make an early-stage investment actually work.

What is missing is the shared language and mechanisms to connect them.

When money is on the move

Over the next decade, a large pool of Taiwan's assets will reach a moment of reallocation at the same time: succession in family businesses (a fifth of family-business owners are already over 65, and 85% of high-net-worth clients have started or are preparing succession planning); new supply-chain decarbonization requirements for companies; and financial institutions catching up on sustainable-finance targets.

When money is moving, its direction is easiest to change. Once it settles again, it is very hard to move.

These decisions will be made quietly in family meetings, boardrooms, investment committees and policy meetings. I hope that in those rooms, alongside return and risk, someone asks this question:

Beyond continuing to make money, what part of Taiwan does this money want to make different?

Prosperity does not find its own way to where it is needed. Someone has to lead the way.

The author is an executive director of the Taiwan Impact Investing Association, a partner of Sustainable Impact Capital (SIC), and chairman of DoublePortion Capital. The observations on early-stage investing in this article come from the author's experience in the SIC investor community.