Rivian electric pickup will debut with three editions, with a cheaper one to follow

Rivian is opening up pre-orders for three editions of its upcoming electric pickup truck and SUV that start as low as $67,500 and with a battery range of more than 300 miles. However, more options will follow, including a base version that will have a smaller range of at least 250 miles and a price below $67,000.

Information on the three editions and their accompanying equipment packages, paint options and pricing is just a few of the numerous details released Wednesday on Rivian’s website. Perhaps one of the more notable tidbits include the addition of cheaper base version of the pickup and SUV, the official inclusion of the camp kitchen accessory and confirmation that a battery pack capable of more than 400 miles will be offered at some point in the future.

Rivian, which has attracted investment from the likes of Ford, Amazon, funds managed by BlackRock, T. Rowe Price and Associates and Cox Automotive, is aiming to become the first to bring an EV pickup truck to market. But it’s facing competition from legacy automakers such as GM as well as Tesla, which says it will start production of its futuristic looking Cybertruck in late 2021. Ford is also planning to bring an all-electric F-150 pickup truck to market in 2022.

Image Credits: Rivian

Deliveries of the first and, so far, most expensive version of the pickup truck called the Launch edition will begin in June 2021. The Launch edition of the RT1 truck will start at $75,000 (that’s before federal tax incentives are applied) and be able to travel more than 300 miles on the standard battery. The Launch edition will also have a special paint color called “Launch Green” along with other special badging and 20-inch all-terrain or 22-inch sport wheel upgrades included.

Tho other packages — the Adventure and Explore — will be offered for the RT1 truck and the R1S SUV. All of these versions will have more than 300 miles of range. The big differences come in the finishes. The Launch and Adventure editions, for instance, come standard with an off-road upgrade with reinforced underbody shield, dual front bumper tow hooks and air compressor as well as “compass yellow” interior accents, 100% recycled microfiber headliner and “Chilewich floor mats.”

The various pickup truck editions range between $75,000 and $67,500 in price. The R1S SUV prices range between $77,500 and $70,000. And all of these editions will arrive in the marketplace at different times between June 2021 and into January 2022.

Customers who place pre-orders now, which requires a $1,000 deposit, will have access to a configurator November 16. Everyone else will have access to the configurator, which allows customers to pick the paint color, equipment package and other details, on November 23.

The bigger 400-plus mile battery will come to the pickup truck first, starting in January 2022, according to Rivian. A longer range R1S SUV with both five- and seven-passenger seating will be announced following start of production, the company said on its website.

 

Study: London and SF have become Impact Tech hubs, with 280% increase in VC in 5 years

New research has found that San Francisco and London have become two of the world’s leading hubs for VC investment into tech solutions which address one or more of the 17 UN’s Sustainable Development Goals (SDG), more commonly referred to as ‘Impact Tech’. They are followed by Paris, Berlin, Stockholm, Shanghai and Beijing.

Tech solutions for such pressing issues as the climate crisis and social inequality has seen a 280% increase in global VC investment from 2015 to 2020, while investment in this space more than doubled in both cities over the past five years. The report was put together by London & Partners and Dealroom as part of this week’s Silicon Valley Comes to the UK virtual event. Over 5,000 startups were surveyed to create the data.

According to the research, VC investment into London-based impact tech start-ups has grown by almost 800% (7.8 times) since 2015, compared to 3.1 times in Europe as a whole. 2020 is set to be a record year for London’s impact tech companies, which have received $1.2bn in VC investment from January to October, already matching 2019 levels. London’s impact firms have also secured 429 deals between 2015 and 2020, more than any other city globally.
 
San Francisco’s impact based tech companies have also shown strong growth over the past five years, with the data revealing that VC investment into its impact tech companies has almost tripled (2.8 times) from 2015 to 2020. So far this year, SF-based impact tech companies attracted $1.7bn of VC investment in 2020 – more than any other city globally. At a national level, the United States received more VC funding for impact tech companies than any other country in the past five years, with investors pumping $35.8bn into US firms since 2015, double the amount invested into China ($16.8bn) and the United Kingdom ($6.1bn).
 
The research also found that UK capital has produced 241 impact start-ups since 2006, with 95 companies founded in San Francisco. In London, ‘impact unicorns’ include Octopus Energy (green energy), Arrival (zero-emission, public transportation vehicles) and Gousto (food) and Babylon Health (AI healthtech).

Climate change and clean energy solutions have attracted the most interest from investors in both cities, making up over 50% of overall VC investment over the last five years. Funding rounds including at least one North American investor made up $234m of VC investment so far this year in London, up from $85m in 2018, and equating to a fifth of all VC investment into London’s impact startups.
 
Funding rounds for London impact companies involving North American investors in 2020 include a $118m growth equity round into Arrival by Blackrock, an $80m Series B round for COMPASS Pathways and a $25m Series C funding for Tractable.

Meanwhile, Impact startups are crossing the pond in both directions. Arrival is now operating in Los Angeles, while Octopus Energy launched in the US market in September after closing a $360m funding round in April and acquiring Silicon Valley-based startup Evolve Energy. And San Francisco-based Allbirds, the sustainable shoe retailer, opened its first European flagship store in London in July 2018.

Commenting, Janet Coyle, managing director for business, London & Partners said: “San Francisco and London are two of the world’s top hubs for innovation and technology. But today’s figures also show that they are leading the way in creating purpose-driven companies striving to tackle some of the most pressing environmental and social challenges.”

ByteDance asks federal appeals court to vacate U.S. order forcing it to sell TikTok

In a new filing, TikTok’s parent company ByteDance asked the federal appeals court to vacate the United States government order forcing it to sell the app’s American operations.

President Donald Trump issued an order in August requiring ByteDance to sell TikTok’s U.S. business by November 12, unless it was granted a 30-day extension by the Committee on Foreign Investment in the United States (CFIUS). In today’s filing (embedded below) with the federal appeals court in Washington D.C., ByteDance said it asked the CFIUS for an extension on November 6, but the order hasn’t been granted yet.

It added it remains committed to “reaching a negotiated mitigation solution with CFIUS satisfying its national security concerns” and will only file a motion to stay enforcement of the divestment order “if discussions reach an impasse.”

Security concerns about TikTok’s ownership by a Chinese company were at the center of the executive order Trump signed in August, banning transactions with Beijing-headquartered ByteDance.

Trump signs orders banning US business with TikTok owner ByteDance and Tencent’s WeChat

The executive order claimed that TikTok posed a threat to national security, though ByteDance maintains that it does not. But in order to prevent the app, which has about 100 million users in the U.S., from being banned, ByteDance reached a deal in September to sell 20% of its stake in TikTok to Oracle and Walmart. With the Biden administration set to take office in January and ByteDance’s ongoing legal challenge against the divestment order, however, the future of the deal is now uncertain.

TikTok fact checks: US IPO, Chinese ownership, $5B in taxes

The new filing is part of a lawsuit TikTok filed against the Trump administration on September 18. It won an early victory when the court stopped the U.S. government’s ban from going into effect on its original deadline that month.

In a statement emailed to TechCrunch, a TikTok spokesperson said it has been working with the CFIUS for a year to address its national security concerns “even as we disagree with its assessment.”

“Facing continual new requests and no clarity on whether our proposed solutions would be accepted, we requested the 30-day extension that is expressly permitted in the August 14 order,” the statement continued.

“Today, with the November 12 CFIUS deadline imminent and without an extension in hand, we have no choice but to file a petition in court to defend our rights and those of our more than 1,500 employees in the US.” 

TikTok asks U.S. federal appeals court to vacate U.S. divestment order by TechCrunch on Scribd

Chan Zuckerberg Initiative faces racial discrimination allegations from former employee

Ray Holgado, a former employee of the Chan Zuckerberg Initiative, recently filed a racial discrimination complaint with the California Department of Fair Employment and Housing. Holgado, who is Black, worked at CZI from September 2018 through August 2020.

“Despite its social justice rhetoric, CZI is not a welcoming environment for Black employees,” Holgado’s complaint states. “Black employees are underpaid, undervalued, denied growth opportunities, and marginalized. Black employees who want to advance within the organization are shut down and labeled as too assertive or aggressive, while non-Black employees are favored and encouraged. When Black employees have communicated these concerns to CZI leadership, CZI has responded defensively and failed to address the underlying issues. CZI has utterly failed to ‘build a more inclusive, just, and healthy future’ for its Black employees.”

In his complaint, Holgado alleges he was paid less than some of his colleagues doing similar work to him. According to the complaint, a recruiter denied Holgado’s request to negotiate his salary but later found out other, non-Black employees had been able to negotiate a higher salary. Holgado went on to describe other instances in which he was allegedly denied opportunities for promotions and growth, and was treated differently because of his race.

In addition to his own experiences, Holgado says the alleged issues of discrimination at CZI are systemic. According to the complaint, Holgado told CZI co-founder Priscilla Chan that the organization’s approach to diversity was successful in retaining Black people but didn’t do enough to empower Black employees “or integrate their perspectives into the work,” the complaint states. In response, according to the complaint, Chan acknowledged it was concerning but said “DEI may look different for each of us.”

In a statement to TechCrunch, CZI denied the claims.

“While we take any allegation of discrimination seriously and will do so here, this former employee’s specific allegations were previously raised internally, independently investigated, and found to be unsubstantiated,” the spokesperson said. “The Chan Zuckerberg Initiative is committed to fair treatment, access, and advancement for all members of the CZI team. We do not tolerate discrimination of any kind, full stop.”

This complaint comes after a group of more than 70 employees in June asked CZI to commit to 12 changes that would make the philanthropy more inclusive. Then, in August, The Washington Post reported that some Black employees were pushing CZI to approach more work through a racial equity lens. They wrote a letter to Chan, describing how CZI has issues with systemic racism, discrimination and anti-Blackness. Holgado was part of that group.

“Unfortunately, Chan once again failed to grasp the seriousness of the issues the letter raised, refusing to meet several of the group’s requests, most notably declining to provide transparency into CZI’s pay equity data as it related to Black employees,” Holgado wrote today on the National Committee for Responsive Philanthropy.”Instead of working through the plan of action that was put forth by Black employees, she tasked a recently hired chief operating officer with devising and implementing an alternative course of action. Having witnessed the dynamics of passing the buck and placating employees with half measures play out multiple times at the foundation, I recognized that further efforts would be in vain.”

TechCrunch has reached out to CZI and will update this story if we hear back.

 

Mirror founder Brynn Putnam on life with Lululemon — and whether or not she sold too soon

Brynn Putnam has a lot to feel great about. A Harvard grad and former professional ballet dancer who opened the first of what have become three high-intensity fitness studios in New York, she then launched a second business in 2016 when — while pregnant with her son — she was exercising at home and couldn’t find a natural way watch a class on her laptop or phone. Her big idea: to install a mirrored screen in users’ homes that’s roughly eight square feet and through which they could exercise along to all manner of streamed and on-demand exercise classes through a subscription package costing just $39 per month.

If you’ve followed the home fitness craze, you may know already that idea, Mirror, quickly took off with celebrities, who gushed about the product on social media. The company also attracted roughly $75 million in venture funding across several fast rounds. Indeed, by the end of last year, people had bought  “tens of thousands” of Mirrors, according to Putnam, and she was beginning to envision Mirror’s as content portal that might feature fashion, enable doctor’s visits, and bring both kids classes and therapy into the home, among other things. As she told The Atlantic back in January, “We view ourselves as the third screen in people’s homes.”

Then, in June, the company sold for $500 million in cash — including a $50 million earn-out — to the athleisure company Lululemon. For Putnam, the deal was too compelling, allowing her to secure the future of her company, which continues to run as a subsidiary. Investors might have liked it, too, given that it meant a fast return on their investment, not to mention that Mirror had steep competition, including from Peloton, the biggest giant in the home fitness market.

Still, as the pandemic has raged on, it’s easy to wonder what the young company might have become, given the amount of time that people and their children are spending at home and in front of their screens. As it happens, that’s not something about which Putnam says she spends time worrying about, including as Lululemon begins to put more muscle behind Mirror — which Putnam is still running with a 125 employees.

Just today, for example, Lululemon announced that it is installing Mirrors in 18 of its now 506 U.S. locations, including in San Francisco, Washington, D.C., and Miami. Lulemon hasn’t start selling products directly through Mirror yet but “shoppable content” is “certainly on our radar,” says Putnam. And the company’s revenues, expected earlier this year to reach $100 million, and now on target to surpass $150 million revenue, she says.

We talked with Putnam late week about life at Lululemon, what could have been, and what will be in a chat that’s been edited lightly for length. (You can listen to the full conversation here.)

TC: People who follow the company know why you started Mirror, but how, exactly, did you start Mirror?

BP: In the case of Mirror, I had this concept for the product, and then really, the first step was buying a Raspberry Pi, a piece of one-way glass, and an Android tablet, and assembling it in my in my kitchen to see if this idea in my mind would be able to work and come to life.

TC: Did you take any coding classes? People might not imagine that a former ballet performer with a chain of fitness studios would put something together like that in her kitchen.

BP: No, I’ve been very fortunate to have a husband who has a bit of a development background. And so he helped me to put the first little bit of code into the Mirror and just really ensure that the concept I had in my mind could be brought to life. And then from there, obviously, over time, we hired a team.

TC: Are they manufactured in the States? In China? How did you start figuring out how to put those pieces together?

BP: I had heard a lot of hardware horror stories about teams working with design agencies to design these beautiful products and who, by the time they actually got to manufacturing, found out that something wasn’t feasible about their design when it came to commercialization or just running out of money in the process. So I actually went backwards. I drew a sketch on a napkin and did a small set of bullets of the things that I thought were really just crucial to make the product a success. And then I went to find factories in China that were familiar with digital signage, working with large pieces of glass, large mirrors, learned about their systems and processes, and then brought it back to the U.S. to a local manufacturer here on the East Coast to refine into a prototype. And then we eventually moved to Mexico when we were ready to scale.

TC: The mirror is about $1,500 dollars. How did you go about winning the trust of consumers that would lead them to make such a sizable investment?

BP: When you’re when you’re building an innovation product, you can’t really compete on specs and features like you do with phones or laptops. So you’re really building building a brand, which means that you’re telling stories. And in our case, we spent a lot of time, from the very early days, really imagining the life of our members and figuring out how to craft that story and tell that story.

And then we were fortunate early on to have members fall in love with the product. And then they started to tell our story for us. So once you have that customer flywheel that starts to kick in, your job becomes much easier.

TC: You had actors, celebrities, designers, and social media influencers talking about their Mirrors. Was it just a matter of sending it off to a few people who started getting online and sharing [their enthusiasm for the product] with their followers? Was it that simple?

BP: We knew that we wanted to make big bets early on to make the Mirror brand seem larger and more established than it was, because it’s a premium product in a new category. And we wanted people to trust in us and the brand. And so we did things like out-of-home advertisements quite early, we moved into television quite early, and we also did some very strategic early celebrity placements. But the way in which the celebrity placements grew and expanded was very much not intended and was just kind of a fascinating early example of the network effects of the product. One celebrity would get it and then another would see it in their home. Or they would see it in their stylist’s home or their agent’s home. And it spread through that community very, very quickly in one of the earliest examples of member love for us.

TC: How did you convince early adopters that your business had staying power, and were investors persuaded as quickly?

BP: Trying to assure customers that they wouldn’t invest in this Mirror, and then the company would go out of business in a few years and they would be they’d be left with a piece of hardware but no access to the content or the community that they’d fallen in love with was very important. It was one of the factors in deciding to partner with Lululemon and have the incredible brand stability and love of such a premium global brand.

In terms of fundraising, I think we were we were really fortunate to have a product that once you saw it, you got it and fell in love with it in a market that was clearly big and growing, with a really good competitive data point in Peloton.

TC: Who started that conversation with Lululemon? Were you talking to Peloton and other potential acquirers?

BP: I’ve been really fortunate to actually work with Lululemon for my entire fitness career. There was a team of Lululemon educators here in New York who were the very first clients of my studio business, and frankly, in many ways were responsible for helping that business to grow and thrive and to give me confidence as a first-time small business owner. Then we reconnected with Lululemon about a year before the acquisition as an investor; they made a small minority investment in the company. And we began to work together on various projects . . .From there, really, the partnership just grew. Mirror was not for sale. We were not looking for an acquirer. But it’s really your responsibility as a founder to always be weighing your vision, your responsibility to your team and your responsibility to your shareholders. And so when the opportunity presented itself — before COVID actually — it felt like really just too good an opportunity to pass up.

TC: But you also you had ambitions of turning this into a much broader content portal where you would maybe have doctor visits and other things, which I would think won’t happen now.

BP: The vision for Mirror very much remains the same and we’re excited to continue to expand the types of content that we offer via the Mirror platform, really with an eye toward any type of immersive experience that makes you a better version of yourself. So I think you will see a broader range of content from us in the coming years.

TC: You’ve mention in the past as a selling point that Mirror is a product that’s used by families. Is there children’s programming or is that coming soon?

BP I think one of the things that surprised us but delighted us about Mirror has been the number of households that have over two members. More than 65% of our households have over two members, which means that you’re often getting younger members of the household involved. I do think that is a function of both the versatility of the platform and the fact that multiple people can participate in more content. At the same time, we’ve actually seen the number of users under 20 grow about 5x during the COVID months as young adults have returned home to be with their their families or teenagers have started doing remote schooling. So we’ve leaned into that with what we call “family fun” content that’s designed to be performed by the whole family together.

TC: Do you see a secondary market for refurbished Mirrors in the future? Will there be a second version, if there isn’t already?

BP: We’ll obviously continue to to refine the hardware over time, but the real focus of the business is through improving the content, community and experience, and so for us — unlike Apple, where the goal is to really release a new model every year and continue to have folks upgrade the hardware — we focus on providing updates via the software and the content, so that we’re continuing to add value onto the baseline experience.

TC: What can people look forward to on this front?

BP: We’re taking a major step toward  building a connected community through our community feature set launching this holiday, including a community feature that enables members to see and communicate with each other and their instructor; face offs that allow members to compete head-to-head against another member of the community and earn points as you hit your target heart rate zones; and friending, so you can find and follow your friends in the Mirror community to share your favorite workouts, join programs together and cheer each other on.

TC: Are you still selling Mirrors to hotels and business outside of Lululemon?

BP: We do have b2b relationships. You can find mirrors in hotels, small gyms, buildings, residences, and then obviously direct-to-consumer through the Mirror website, the Lululemon website, and both of our stores

TC: When you look at Peloton now and how its stock has completely exploded this year,  do you think ever that you should have hung on a little longer? Do you ever think ‘maybe I sold too soon?’

I’ve woken up every day really for my entire career kind of focused on the same mission but trying to solve the problem and achieve my vision and in different ways. Which is: I really believe that confidence in your own skin is the foundation of a good and happy life. And fitness is an incredible tool for building that confidence that carries over into your personal relationships, your work performance, your friendships. And so for me, that’s always really been the North Star, which is, ‘How do we get more Mirrors into more homes and provide more access to to that self confidence?’ So I spend very little time comparing to competitors and much more time focused on our members’ needs and how to meet them.

Hong Kong insurtech startup Coherent gets $14 million Series A led by Cathay Innovation

Based in Hong Kong, Coherent helps insurance providers go digital. With their services more relevant than ever during the COVID-19 pandemic, the startup announced it has raised $14 million in new funding. The Series A round, led by Cathay Innovation with participation from Franklin Templeton, will be used to grow Coherent’s client base in Asia, including insurers who want to add more digital services to their usual sales processes because of the pandemic.

Founded in 2018, Coherent’s platform, called Product Factory, allows insurance providers to digitize their backend operations by uploading Excel pricing models, which means their IT departments don’t need to write new code or re-haul their IT infrastructure.

The company also offers three tools for working with customers. Coherent Connect is a social media marketing campaign manager; Coherent Explainer is a sales tool for breaking down quotes; and Coherent Flow allows agents to sell policies to customers remotely with features like video chat and electronic signatures.

While Coherent’s remote tools are a key selling point now, outdated legacy systems have long been a pain point for insurance providers, slowing down backend operations and sales while increasing the cost of premiums.

John Brisco, co-founder and chief executive officer of Coherent, told TechCrunch that the startup has worked with more than 30 insurers in 10 global markets during 2020.

Global premiums initially shrank, but research by Swiss Re predicts the insurance industry will recover by next year, led by demand in China.

Coherent will focus on China and emerging markets in Asia. The startup, which currently has about 120 employees, plans to increase the number of its tech and actuarial talent in Hong Kong, Singapore, Shanghai and Manila, and build new teams for Japan, the United States and Thailand.

Despite global headwinds, Chinese hardware startups remain to take on the world

Bill Zhang lowered himself into lunges on a squishy mat as he explained to me the benefits of the full-body training suit he was wearing. We were in his small, modest office in Xili, a university area in Shenzhen that’s also home to many hardware makers. The connected muscle stimulator attached to the suit, called Balanx, is designed to bring so-called electronic muscle stimulation, which is said to help improve metabolism and burn fat.

“We are not really aiming at Chinese consumers at this point,” said Zhang, who started Balanx in 2014. “The suit is for the more savvy consumers in the West.”

Prospects for hardware makers were looking bright until two years ago when the Trump administration began setting trade barriers on China. Relations between the two countries have been deteriorating over a series of flashpoint events, from Beijing’s policy on Hong Kong to the coronavirus pandemic.

Chinese entrepreneurs don’t expect relationships between the countries to warm up anytime soon, but many do believe the new office will make “less erratic” and “more rational” policy decisions, according to conversations TechCrunch had with seven Chinese hardware startups. Chinese tech businesses, big or small, are adapting swiftly in the new era of U.S.-China competition as they continue to woo overseas customers.

Designed in China

Zhang is just one of the many entrepreneurs looking to bring state-of-the-art Chinese hardware to the world. This generation of founders no longer hawk cheap electronic copycats, the image attached to the old “Made in China” regime. Decades of knowledge transfer, product development, manufacturing, export practice and policy support have made China a powerhouse for producing new technologies that are both edgy and still widely affordable.

The Balanx smart training suit / Source: Balanx

Anker’s power banks, Roborock’s vacuums and Huami’s fitness trackers are just a few items that have gained loyal followings in several overseas markets, not to mention global household names like Huawei, Xiaomi, Oppo and DJI.

Consumer sentiment is also changing. Europeans’ perception of “Made in China” quality and innovation has “improved significantly” over the last 10 to 15 years, said Frank Wang who oversees marketing at Xiaomi-backed Dreame which makes premium home appliances including cheaper alternatives to Dyson hairdryers and vacuums.

The new players are eager to replicate the success of their predecessors. They seek media attention and retail partners at international trade fairs like CES, teach themselves Facebook and Google campaigns, and court gadget lovers on crowdfunding platforms. Investors ranging from GGV Capital to Xiaomi rush to back scrappy startups that are already shipping millions of units around the globe.

For Donny Zhang, a Shenzhen-based electronics parts supplier to hardware companies, businesses have been shrinking as soon as the trade war began. “My clients are taking the brunt because the costs of procurement have increased,” he said of those who directly or indirectly deal with American firms.

While many export-led hardware businesses loathe decreasing profitability, some learn to adapt and look for a silver lining. That has unexpectedly spurred new directions for factory owners in China. Indiegogo, one of the world’s largest crowd-funding platforms, saw the changes first hand.

“Once tariffs increase, there’s not much profit margin left for manufacturers because the middlemen already eat up the bulk of their profit,” Lu Li, general manager for Indiegogo’s global strategy, told TechCrunch.

“A good solution is for factories to skip the middlemen and sell directly to consumers with their own brands. Once the goal of brand building is clear, they often come to us because they need marketing help as a first step to establish themselves as a global consumer brand.”

The trend, dubbed “direct-to-consumers” or D2C, also plays into China’s national plan to encourage manufacturing upgrade and homegrown innovations to compete globally, an initiative that began to take shape around 2015. The development naturally makes China Indiegogo’s fastest-growing region in the last two years: in the first three quarters of 2020, businesses coming from China jumped 50% year-over-year, according to Li.

Localize

Having an appealing product and brand is just the prerequisite. Ever-changing trade policies and geopolitics have forced many Chinese businesses to localize seriously, whether that means setting up a foreign entity or building a local team.

Dreame’s wireless vacuum / Source: Dreame

For Tuya, which provides IoT solutions to device makers around the world, the trade war’s effect has been “minimal” since it has operated a U.S. entity since 2015, which employs its local sales and technical support staff. Most of its research and development, however, still lies in the hands of its engineers in India and China, the latter of which can be a potential contention point, as shown by TikTok’s recent backlash in the U.S.

“The key is compliance. We have a dedicated team of security experts to work on compliance issues. For instance, we were one of the first to get GDPR certified in Europe,” said the company’s chief marketing office Eva Na.

The company’s readiness is prompted by practical needs though. Many of its clients are large Western corporations that demand strict legal compliance in vendors, so Tuya began collecting the needed certificates early on. Connecting 200,000 SKUs today, Tuya’s footprint is found in over 190 overseas countries, which account for over 60% of its business.

Well-funded Tuya may have the financial and operational capacity to sustain an overseas team; but for smaller startups, localization can be a costly and tedious learning curve. Many opted to set up a Hong Kong entity to tap the city’s status as a global financial hub and evade trade restrictions on China, an advantage of the territory that began to crumble following Beijing’s implementation of the national security law.

Balanx, the smart training suit maker, has a Hong Kong entity like many of its export-facing hardware peers. To cope with new global headwinds, it registered a virtual company in Nevada but quickly realized the entity is of little use unless it has an on-the-ground operation in the U.S.

“Many local banks would ask for utility bills and etc. if I want to open an account, which we don’t have. We realized we must have a local team,” asserted the founder.

Hope

Zhang is positive that small companies like his own will remain under the radar in spite of U.S. sanctions. “Just avoid having any government connection,” he said.

Populele, PopuMusic’s smart ukulele / Source: PopuMusic

Indeed, some of the more “benign” and niche products are continuing to thrive in their global push. PopuMusic, a Xiaomi-backed startup making smart instruments like ukulele and guitar to teach beginners, is one. “We aren’t affected by the trade war. We are in a business that’s neither threatening nor aggressive,” said Zhang Bohan, founder of PopuMusic, which counts the U.S. as one of its biggest overseas markets.

Chinese brands are also seeing their edge as the coronavirus sweeps across the globe and confines millions at home. Hardware makers like Balanx, Dreame and PopuMusic have long learned to master e-commerce and logistics in a country where online shopping is ubiquitous.

“Consumers in Europe and the U.S. are growing more accustomed to e-commerce, a bit like those in China five to eight years ago,” said Wang of Dreame.

Rather than rethinking the U.S., PopuMusic is forging further ahead by launching a new connected guitar via an Indiegogo campaign. Global expansion is at the core of the startup’s vision, the founder said. “We are global from day one. We had an English name before even coming up with a Chinese one.”

In the process of making big bucks, hardware makers may have to downplay their “Made in China” or “Designed in China” brand, said Li of Indiegogo. This could help them avoid unnecessary geopolitical complications and attention in their international push. But one has to wonder how this new generation of entrepreneurs is reckoning with their national pride. How do they deal with the mission passed down by Beijing to promote Chinese innovation in the global marketplace? It’s a line that Chinese entrepreneurs have to tread carefully in their global journey in the years to come.