Singapore lair: EMR vendor Vault Dragon’s headquarters. (photo by Jimmy Lin)

Located near Singapore’s Toa Payoh MRT station is Vault Dragon, a Singapore-based electronic medical records (EMR) firm with a market value of NT$300 million. Founder ­Tseng ­Ching Tse was born in Taiwan and left to study in Singapore when he was 11 years old.

Clawing his way up from the valley floor

It’s hard to imagine that Vault Dragon is the third startup of ­Tseng, who is still only 32 years old. He launched the previous two when a freshman and then a junior at university. Although they both failed eventually, these experiences convinced him that his firm must be the “sole supplier of a new product or service, or a unique adaptation of an existing one.”

In 2013, he and a fellow classmate of Indian descent sensed the business opportunities available in the emerging “valet storage” market. With ­Tseng hand­ling operations and marketing while his friend took responsiblity for the technology, the pair partnered to form Vault Dragon. It specialized in mini-storage, providing clients with sturdy, waterproof boxes to pack their belongings. Vault Dragon would then pick up the boxes and place them in a secure warehouse. During the startup phase, when the firm’s service offering was not yet well defined, it still managed to attract NT$30 million in its first round of financing.

Of course, high levels of financing bring with them strong pressure to achieve growth. During the first year of operations, ­Tseng personally relocated to Hong Kong to open up the market. Little did he expect that within two weeks, a newly formed competitor there would clone Vault Dragon’s service and engage in a price war with the Singaporean firm.

After half a year of heated combat, ­Tseng returned to Singa­pore with his tail between his legs, only to be faced with a new dilemma: during his absence, his partner had emptied their venture’s bank account. A legal tussle ensued, and eventually ­Tseng managed to regain control of the company’s funds. However, since his former partner had locked the warehousing system source code, the firm effectively had no product to sell for six months. Customers were lost, employees resigned, and ultimately only ­Tseng and an intern were left to hold the fort.    

Immortalized as business school case study

A startup fails for three basic reasons, says ­Tseng: if its funds run out, if its product doesn’t fit the market, or if the partners fall out. Given that he simultaneously encountered two of these three negative factors, many people, including some of the firm’s investors, advised him to throw in the towel. “But we still had some clients, and some of our shareholders still believed in me.” ­Tseng was unwilling to disappoint them.

Tseng’s Hong Kong experience taught ­him that he should not rely on capital strength alone as a source of competitive advantage. To ensure sustainable operations, specialized technology or industrial knowhow should be employed to raise the bar for competitors, and the target industry must be one that is resilient to market cycles. Tseng took stock of his firm’s existing resources and knowhow, and contemplated how to apply the “mini-warehouse” concept to address unmet needs in the digital era by providing customers with integrated record management and digitization services.

With limited resources and background knowledge in the healthcare sector, and no track record in that field, ­Tseng cold-called one clinic after another, only to meet with repeated rejections. After six months, however, he located two doctors willing to give him a try, and over a period of almost two years he established Vault Dragon as a leading digital health solution provider. From storing and scanning paper-based patient records, to creating digital medical records and even functioning as an enterprise resource planning (ERP) system, Vault Dragon offers a suite of cost-effective record management and data analytics solutions to healthcare institutions.   

Today, many of Singapore’s healthcare groups are Vault Dragon customers, and the firm has since expanded to Shang­hai. Between 2013 and 2018, turnover skyrocketed from NT$800,000 to NT$30 million. ­Tseng’s entrepreneurial journey has even become a case study in the curriculum of the National University of Singapore Business School.

Creating a platform for Taiwanese talent

On numerous occasions, ­Tseng has been invited to return to Taiwan and work with startups here. Based on these contacts, he observes: “They are not resourceful enough!” If they limit themselves to targeting the Taiwan market, they will have little chance of attracting international venture capital. ASEAN, Taiwan and Hong Kong are all part of the same investment ecosystem, notes ­Tseng, but thanks to widespread use of English, tax incentives and robust rule of law, many venture capital firms have chosen Singa­pore as their base, so startup visibility is more evident there than elsewhere. If Taiwanese startups can establish a presence in Singa­pore, or participate more in the local startup scene and thereby go beyond their “comfort zone,” they will be more likely to attract attention.    

Another startup, CloudMile, is an example of a firm that has actively chosen to extend its reach beyond ­Taiwan.

Founded in 2017, CloudMile mainly provides cloud management application services, and utilizes AI technology and big data analytics to help clients with business forecasting and industrial upgrading.

Spencer Liu, CloudMile founder and CEO and formerly a manager of an international business firm’s technical team, was deeply impressed by the abbreviated “formula” once used by foreign management—1, 3, 7, 10—to rank the pay packages of engineers by ­nationality. If an Indian engineer was paid $1, a Taiwanese one would get $3, while second-tier European and Americans would be rewarded with $7 and top-tier Westerners with $10. But Liu believes that Taiwanese engineers are second to none, and he hopes to create a marketplace that will help them find their rightful place in the world at large.

CloudMile set up its Hong Kong operations team, which won more than a dozen new customers in one three-month period, and began preparations for setting up an outpost in Singapore—all within 2018.

Singapore foothold

Winning a place in the EMBA program at the National University of Singa­pore is the first step Liu has taken to gain a foothold in the city, his goal being to amass critical connections and resources. The Singa­pore government encourages startups to expand overseas, and provided the firm maintains its operational headquarters in Singa­pore, the government will subsidize each new overseas outpost to the tune of S$100,000 (NT$2.3 million). Liu estimates that this is the amount needed during the initial period, when a new team is being established. His firm’s headquarters will gradually relocate to Singa­pore in the future, he says frankly, while Taiwan will serve as the R&D center. Singa­pore is a highly competitive market. One’s warriors must be trained in the most challenging environment, he says, in order to ensure survival in other national marketplaces. 

Startups: Rules of the game

Vault Dragon plans to expand its footprint to include Thailand and Brunei in 2019, and is aiming for an annual turnover of NT$60 million, twice its current NT$30 million. “But for an investor, even doubling revenue every year is still too slow,” says Tseng with a smile. He notes that for venture capital firms, out of every ten investments, seven will fail, two will break even, and only one may exhibit growth worth 100 times the original investment. Thus, everyone is keen to hunt down that rare “unicorn” with such explosive potential.

To those who are keen to be an entrepreneur, Tseng Ching Tse’s advice is to start now. Typically, seven of ten new firms will fail in their first year, and 99% will not last beyond five years. In entre­preneur­ship, failure is the norm, so why not set your sights on the future, and experiment as much as possible by launching big projects that aim at large markets?

Spencer Liu says that if he set his sights firmly on the Taiwan market, and reduced spending outside Taiwan, CloudMile could quickly be floated on Taiwan’s over-the-counter securities market. But he prefers the global battle­field. “After all, isn’t entrepreneurship all about doing something you’ve never done before?”

Startups succeed when they discover real-world problems and solve them with innovative solutions. Founders should focus on creating sustainable competitive advantages, and be fearless when entering the fray. Do so, and whether in Taiwan or Singapore, the world can be your oyster!