Development Stage: Pre-Seed, Near-Seed.
What are need to be showcased to investors:
- MVP (Minimum Viable Product) with positive customer reviews.
- Founder’s background related to the technology industry.
- BOD team with a successful exit history as a plus.
- Product-Market Fit: The product aligns well with the market.
- Attractive market size with potential for rapid growth.
Highlights:
- Platform model connecting expert consultants with those seeking advice.
- Differentiation from competitors: Unlike platforms like Google or ChatGPT that provide general answers, Ask Any’s model helps users find more accurate and high-quality answers based on the personal experiences and identities of experts.
The pain points:
When founders start their businesses, they realize they have thousands of questions that need answers. However, when they reach out to experts:
- High pricing: VND100-200mn/month
- Difficulty connecting with experts: It’s hard to access them.
The solutions:
- Ask Any aims to build a community ready to support businesses and promote knowledge exchange between experts and those seeking advice.
- Knowledge can be applied from large companies to small ones.
- Costs are lower compared to traditional consulting.
- AI-generated knowledge is general and not verified by anyone.
- Invested knowledge must be verified by someone.
App transaction performance report, business results, and balance sheet:
- 15% conversion rate from leads to paying customers.
- Currently supporting 300-500 individuals/month, with a Monthly Recurring Revenue (MRR) of VND500 million/500 transactions/month.
- In 2023:
- June GMV was VND500mn, and the company’s revenue was VND200mn.
- Annual GMV was VND1.09bn and revenue was VND490mn.
- GMV refers to the transaction revenue generated for partners, while the company’s revenue is the commission earned.
- There are 12 developers, and operating costs are approximately VND700mn/month.
- EBITDA is negative.
- In 2024:
- Projected revenue is VND4bn.
- With this Annual Recurring Revenue (ARR), the company is still projected to be unprofitable.
Past Achievements:
- 2022: Developed the app.
- 2023: Developed a network of 200 experts participating in the app.
Balance Sheet Information:
- Invested capital: VND27bn in equity.
- Authorized capital: VND15bn.
Founder’s Background:
- Performance marketing/global performance manager based in Singapore.
- Experience in various advertising channels, including billboard advertising.
- No background in finance.
Sharks’ Perspectives:
Shark Bình:
- Ideas are a dime a dozen, while consulting should be free.
- In developed markets, people can spend USD200-300-2000/hour on consulting.
- In Vietnam, we need to educate people about the value of consulting.
- Existing market functions can be leveraged through APIs with existing products.
- UX/UI is confusing and difficult to use.
Shark Hưng:
- Proposes developing an AI expert.
- Suggests a monthly subscription model for the AI expert.
Shark Vân:
- Sees potential but thinks commercialization is lacking.
Shark Minh:
- Don’t think about the 27 billion, think about the fact that you need support to help your startup grow.
Deal Structure:
- Original offer: VND2bn for 7% equity, resulting in a post-money valuation of approximately VND28bn.
- Shark Bình’s offer: VND2bn for 30% equity, valuing the company at VND6.67bn post-money.
Founder’s perspective:
- The founder believes their contribution should be valued equally to their investment, seeking a 1:1 valuation.
Founder’s Feedback:
- If they had consulted with the sharks earlier, they could have saved billions of VND.
- The founder is passionate about helping businesses avoid making the same mistakes.
- By successfully building AskAny, they believe they can help countless other businesses save significant amounts of money.
Lucas’ Perspective:
While the founder’s sentiment is understandable, Lucas points out that people often learn best through their own experiences.
Conclusion:
The founder rejected the deal.
Questions and observations:
- For the technology industry, a reference valuation of 15-20x EBITDA is used, or a valuation based on revenue at 10x if EBITDA is negative, especially if the business model has a successful global precedent and demonstrates rapid growth.
- Tech Platforms have high profit margins, often reaching 50-90%.
- The ability to predict recurring revenue is relatively easy (MRR, ARR).
- Due to the recurring nature, the churn rate is low, especially if annual packages can be sold.
- Cost of goods sold: Web servers, hosting, and software development costs are high, particularly in the early stages.
- If the business model can break even, the product lifecycle can extend to 10-15 years, meaning the company doesn’t need to continuously invest large amounts and can reap profits for 10-15 years.
- Setup and deployment costs, as well as costs for product trials, are not easily predictable and are non-recurring.
- Other important metrics:
- Burn rate
- CAC: Customer acquisition cost
- Revenue growth/decline
- NPS: Net Promoter Score
- Runway: How long the company can sustain operations with its current cash
- Churn rate
- Conversion rate from potential customers/users to paying customers.
Overall Assessment of the Deal:
Founder Background:
- The founder’s experience in growth marketing for a global Singaporean company is promising, indicating potential for high earning capacity (estimated salary range of $10,000 – $15,000/month). Given the founder’s age and experience, they likely have a strong professional network. However, their substantial personal wealth may lead to less frugal spending habits, which is not typical of early-stage startups.
- The co-founder team should include a financial expert to manage the high R&D costs and to secure funding from angel investors and venture capitalists.
Sunk Costs and Resource Allocation:
- The venture has incurred significant sunk costs, which can cloud decision-making. The focus should shift to maximizing the value of current assets rather than dwelling on past investments.
- The founder’s deep understanding of growth marketing may be overshadowing the need for a strong product strategy and early-stage commercialization.
- The team could benefit from a CTO and CFO to provide technical and financial expertise.
Business Model and Profitability:
- The business model shows potential, especially considering the benchmark of a $500,000 revenue startup with a 50% EBITDA being valued at $5 million.
- To achieve profitability, the company needs to reduce costs, especially in areas like expert fees and marketing expenses.
- A break-even analysis indicates that the company needs to generate approximately $756,000 in annual revenue to cover costs.
Expert Advice and Platform Value:
- There’s a disconnect between the value of expert advice and the willingness of experts to provide it at low costs.
- The platform’s model of connecting experts with clients may face challenges due to factors such as the unique nature of expert knowledge, the difficulty of standardizing advice, and the competitive landscape.
- The suggestion of building an AI-powered expert system is a potential solution to address these challenges.
Platform Challenges and Future Considerations:
- The platform may struggle to maintain a balance between providing a wide range of expert advice and ensuring the quality and relevance of that advice.
- The company should consider how to incentivize experts to share their knowledge on the platform, especially given the high costs associated with developing expertise.
3 Key Recommendations for Ask Any:
- Find a co-founder (CFO, CTO) to provide a well-rounded perspective on decision-making: A CFO and CTO can bring complementary skills and experience to the team, helping to make more informed decisions about finance, technology, and overall business strategy.
- Validate the business model (product-market fit) and develop a clear go-to-market strategy: Before scaling up marketing efforts, it’s crucial to ensure that the product meets a real market need. A well-defined go-to-market strategy will help to optimize resource allocation and avoid wasting money on ineffective marketing.
- Achieve break-even point (BEP) as estimated: Once the company has a clear direction, focus on achieving a monthly recurring revenue (MRR) of $63,000 to break even. This will provide a more sustainable foundation for growth.
Equitix has connections with institutional investors in technology with budget from USD0.7mn to USD20mn. Our priorities are companies that are close to achieving break-even and need funding for growth and scaling. If you have an interesting tech platform/subscription/SaaS model, please leave your contact in the comment section below and we will reach out to you as soon as possible!
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