Gogoro’s US Listing Through a SPAC: Is Taiwan’s Capital Market Ready?

On Gogoro using a SPAC to list in the United States: Let me share my views. 1. First, Taiwan’s capital market: is it ready? I have not seen Gogoro’s financial statements, but I have heard they show substantial losses. Is Taiwan’s capital market psychologically prepared—not only for a very high market capitalization of NT$65 billion, considerably above FamilyMart and Simplo, but also for financial statements that might show: (1) Enormous accumulated losses—not hundreds of millions or a few billion, but possibly over NT$10 billion or more; (2) Very low book equity, potentially even negative, with some preferred shares initially classified as liabilities; (3) Continuing huge losses, and uncertainty about when accumulated losses could be covered even after profitability begins. I think Taiwan’s capital market is fundamentally not ready for this. But we can begin by learning to accept high price-to-earnings ratios, price-to-sales valuation, and low book equity. It need not happen overnight. Regulators and investors must learn and grow together, finding characteristics suited to Taiwan’s market. -- 2. As for Gogoro itself, businesses generally choose the listing venue that suits them best. There is no need to force the issue. I wish Taiwanese companies success in international capital markets, raising more money abroad and bringing it back to develop businesses and contribute to Taiwan. If Gogoro exceeds expectations, it may draw more international capital’s attention to Taiwan, helping accelerate our startup ecosystem. Still, I want to mention some concerns about Gogoro. First, I believe sustained visibility in US capital markets requires three things: 1. A sufficiently large opportunity, such as payments; 2. A top-three position in a region—or a market with a sufficiently large population—such as Southeast Asia; 3. Continued high growth; 4. A good gross margin would be even better (>50%). Companies meeting these conditions, such as Southeast Asian startup giant Grab, can attract substantial capital-market attention. That is where I begin worrying about Gogoro: 1. Are electric scooters compelling enough? Is the potential big enough? Taiwan is the highest-income country where motorcycles are a primary means of transportation; most other such markets are relatively lower-income emerging economies. 2. Gogoro’s revenue mainly comes from Taiwan, rather than a regional market. Its attempt to export its model to Europe ended unsuccessfully when partner Coup closed. If Gogoro cannot prove its model works beyond Taiwan, acceptance in US capital markets remains to be seen. 3. Gogoro is a household name in Taiwan, but mainstream international capital may be relatively unfamiliar with it. 4. My biggest concern is that Gogoro’s growth has already slowed; figures over the past year or two have even declined. US capital markets may not accept a startup of this size presenting declining numbers. These are only my personal guesses, however. Perhaps Gogoro will outperform expectations, much of what I have heard is wrong, and these concerns are unnecessary. I still wish Gogoro success beyond Taiwan, inspiring more Taiwanese startups. -- Taiwan’s regulators can remain open-minded and reconsider our current strengths. This year, Taiwan produced 91APP, a startup unicorn with a US$1 billion market cap. Returning to the points above, 91APP has demonstrated its business model, delivered profits in recent years, covered its early accumulated losses, and has ample cash for development. Its book equity is not high but is acceptable. Revenue growth is only passable, but profit has multiplied and gross margins are relatively high. Taiwan’s capital market can therefore accept this valuation for 91APP. By contrast, I do not think Taiwan’s market is necessarily incapable of awarding Gogoro a high valuation. Rather, the entire market, including investors, needs time to learn. Many ideas cannot change overnight. Taiwan may not yet be able to accommodate unicorns valued at US$2 billion. But it may currently be best suited to startups valued at US$100 million–US$1 billion. Regulators could focus on them: understand their needs, priorities, and concerns, resolve them one by one where possible, and accompany them as they grow. We wish Taiwanese startups well as they seek better-suited markets. In return, Taiwan must ask: what are our advantages and distinctive strengths? Can we attract outstanding international startups—for example, promising Southeast Asian companies valued at US$100 million–US$1 billion—to our capital market? Capital and startup markets worldwide are interconnected and allow free movement. We must build an environment suited to retaining the right teams and, more importantly, attracting other excellent teams. More high-quality Taiwanese and international startups listing here would attract more international capital and sustain the market’s growth. One day, we could retain or create startups worth US$2 billion, US$3 billion, US$5 billion, or US$10 billion. Simply put, Taiwan’s capital market took its first step in 2021, but maturity is still some distance away. We can keep learning and growing. Let us give regulators more encouragement and oversight, and Taiwanese startups more support and good wishes. ----