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How a startup in Hong Kong gets busy in trade war in the US and China – TechCrunch

Taylor Host has operated its artificial intelligence startup from Hong Kong for more than two years. The US entrepreneur has customers from Europe, North America and Asia, but he settled in the city for his proximity to Southeast Asia and mainland China's massive market.

Miro, who co-founded in 2017 with a UK software engineer, had bootstrapped to six employees before retrieving a small note investment. Supported by Silicon Valley-based SOSV, it is now seeking $ 2 million in a new funding round. As trade tensions between China and the United States go on, the company is considering moving for the first time because being a Hong Kong entity is starting to knock off Western investors.

Miro uses the data view to tag photos and videos of runners for the brands they are wearing. It then attributes the data – the purchase of sports goods – to consumer profiles that are part of the customer's CRM system (CRM). Miros AI processes data in markets around the world, but China data is particularly desirable for Western sports brands.

In recent years, the Chinese rising middle class has burned a marathon hazard as they seek a healthier lifestyle. When they participate in a race, Miro's sensors can track the shoes and outfits of event organizers and sponsors. The technology has so far been used in nearly 500 events around the world and analyzed more than 10 million athletes – while most of the technical developments have been carried out in Hong Kong.

"My co-founder and I both spent a significant amount of time in Hong Kong. The majority of our team would call themselves Hong Kong Chinese, so we have a very strong foothold in Hong Kong and we love it here," Host told TechCrunch over a telephone interview.

"The latter, however, has become very difficult to rationalize holding business in Hong Kong. There are several reasons for that, but I think those who stand out are geopolitical."

For one, the host has experienced a "dramatic" "emotional change among Western investors against Hong Kong, where a dubious extradition bill sparked a wave of mass protests recently. The core of the question is fear that the particular administrative region is in violation of Beijing's autonomy. Critics cite examples of a Hong Kong bookstore disappearing and a Financial Times journalist's visa denied by the local government.

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Miro, a Hong Kong based startup, uses the data vision to tag photos and videos of runners for the brands they are wearing. / Photo: Miro

In a disturbing movement, the US government stated the extradition bill "imperils the strong US-Hong Kong relationship" which includes a special trade agreement independent of the Chinese mainland.

In the beginning of July, Hong Kong's leader Carrie Lam announced that the bill was "dead," but the door has been thrown to the love of Hong Kong's autonomous status . Businesses in the territory now run the risk of being drawn into the trade war between the United States and China.

In March, Miro won a competition at SXSW and has since attracted institutional investors of all sizes. But two of their potential backers based in the US have decided to let the negotiating table see Hong Kong as a risk.

"Not a single company has overlooked the problem that we are a Hong Kong based company," Host said. "There is zero appetite from US investors that we've talked about investing in our Hong Kong unit right now."

The risk of supporting Miro, which processes data data with image recognition capabilities, is more pronounced than finance companies with little or no core technology such as intellectual property is one of the major goals of US-China negotiations.

"Foreign venture capitalists have become more concerned with investing in Chinese AI and chip companies even when they do not own core technology," said Joe Chan, founder of Hong Kong-based MindWorks Ventures, to TechCrunch in an interview.

Meanwhile, the trade war has had a tangential impact on US funding for Chinese start-up that focuses on education, lifestyle and other non-deep technology sectors, according to a handful of investors we have been talking to in recent months.

Southeast Asia deserves

With the help of legal and tax consultants, Miro has recently switched to a US entity by signing up in Delaware but will continue its business in Hong Kong. allowed the company to move forward "with some of its interested US investors.

" It was a requirement in our conversations with US investors that they invest It's in an American – not a Hong Kong unit, "the founder noted. "If you are dead that your company is the largest company in the industry, why would you consider yourself in a place that has so much uncertainty and risk?"

For China-based companies whose cross-border business is rooted in Asia, Southeast Asia can be a safe haven from the trade war. As Chan observed, some Chinese startups have meant moving to Singapore to become less politically sensitive.

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Miro won a tonal competition at SXSW and has since attracted institutional investors of all sizes. But potential backers have decided to leave the negotiating table that sees Hong Kong as a risk. / Photo: Miro

Miro is also assuring risk by looking to Southeast Asia, as many would argue is a winner from the fight against the US and China. Like China, the region has an expansive middle class that goes into races and a number of other hobbies and habits that will spawn startup ideas.

In fact, there has been a lot of talk about growing up the region with a population of more than 650 million. A few big-name global investors, including Warburg Pincus and TPG Capital, have set aside new funds in recent months to restore Southeast Asian startup. Business investors, including Tencent, Alibaba, Didi Chuxing and, also cling to gaining ground in this rising part of the continent, as we wrote two years ago.

"At the macro level, the commercial war certainly has a significant impact on China's economy, so we see much more money flowing to Southeast Asia," says Chan.

"For example, some manufacturers have moved to Indonesia where labor is cheaper. China's technological industry – and this is not entirely related to the commercial war – reaches saturation and is dominated by BAT [Baidu, Alibaba and Tencent] so that the opportunity window is small. Meanwhile, Southeast Asia is still evolving. "

In a sense, the trade war has accelerated the shift of attention from China to neighboring countries. The progress was what led Miro to visit one of the region's largest tech conferences Techsauce recently.

" No one talks about the trade war out here in Bangkok. We are talking about how Southeast Asia explodes. And it's not just Chinese investors. There are also Western investors, says host.

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