[SHARK TANK] – SEASON 7 – EPISODE 3 – DEAL 3 – Enfarm – AgriTech – THE DREAM TO ASSIST THE COUNTRY’S AGRICULTURE IN FACING THE GLOBAL FOOD SHORTAGE

Development Stage: Pre-Seed.

To showcase to investors, you need to demonstrate:

• A Minimum Viable Product (MVP) that has received positive customer feedback.
• The founder’s background is relevant to the agricultural industry.
• Previous successful exit experience is a plus.
• The Total Addressable Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) are large enough.
  • TAM: The overall size of the market
  • SAM: The customer segment the team has chosen
  • SOM: Within that segment, after subtracting strong competitors, how much potential remains?

Market Problems and Pain Points:

1. Farmers’ pain points: Market fluctuations, environmental changes, lack of information about soil and crops. Changing this situation is the mission of Enfarm, an agricultural technology company – the smart nutrient meter.
2. Fertilizer is as important as water, but due to a lack of information, farmers have been fertilizing very inefficiently. Data: 60% of fertilizer in Vietnam is not absorbed by plants, wasting USD3.6bn annually. Per capita, this is a loss of 2 months of average income. Excess fertilizer poisons the land, water sources, and creates greenhouse gas emissions. Over-fertilization and over-watering reduce crop yields, especially for high-value durian trees. Durian orchards lose about 50% of their yield due to flower and fruit drop, caused by water, heat, and fertilizer shock.

With Enfarm technology:

• In-soil sensors provide real-time data transmission.
• Sensors are low-cost and durable.
• Data is transformed into extremely useful information for farmers, equivalent to an ISO-certified laboratory.
• Highly accurate and cost-effective soil testing worldwide: 600,000 VND.
• For perennial crops, the measurement deviation is around 10%.
• Data is transmitted to a smartphone in approximately 10 seconds: moisture, temperature, pH, etc.
• Provides recommendations to farmers on what to do.

Price Comparison:

1. Price range: Hundreds to millions of VND.

• Measuring moisture and pH: Hundreds of thousands of VND.

2. Measuring nutrients is more difficult. Chinese-made devices cost around 14 million VND but are often inaccurate.

• Accurate devices cost several thousand USD, around USD9000 or VND225mn.

3. Enfarm device: Affordable yet provides laboratory-quality measurements.

• Laboratory tests can only measure at a specific point in time, usually once a year.
• Enfarm’s device is placed in the soil and can provide daily measurements (real-time).

4. Research and Development (RnD): 2 years of development.

Business Results:

• Sensor Sales: 500 sensors sold, generating VND1.5bn in revenue.
• Founder’s Valuation: The founder is offering 5% of the company for VND5bn, implying a pre-money valuation of approximately VND95bn.

Sensor Components and Intellectual Property:

• Hardware: The hardware component is optimized for cost-effectiveness.
• Software: The software component has not yet been considered for patent protection.

Data History and Analysis:

• Data Collection: 1000 soil samples were tested to gather data.
• Data Analysis: Algorithms were used to isolate, separate, and combine various soil parameters (nutrients, porosity, compaction, moisture, pH, etc.) to identify patterns and conditions specific to each region.
• Focus: The initial focus is on high-value Vietnamese crops such as durian and coffee.
• R&D: VND15bn has been invested in research and development, and the product is now ready for market, with a user-friendly interface designed for farmers.

Risk and Mitigation:

• Measurement Error: The sharks have raised concerns about the risk of inaccurate measurements leading to farmer losses.
• Integrated Solution: The company offers an integrated solution, combining hardware (sensors) with fertilizers.
• Cost Savings: By using the company’s solution, farmers can save VND10-20mn per hectare on fertilizer costs.
• Performance Guarantee: The company guarantees that crop yields will be at least equal to or higher than traditional methods.
• Output Commitment: The company offers a commitment regarding output.

Sharks’ Perspectives and Offers:

• Shark Bình: Believes the company is moving too fast and that their full potential is yet to be realized. However, he expressed interest in joining in future rounds of funding.
• Shark Hưng: Offered to invest VND1bn for 5% equity and an additional VND4bn as a loan or convertible note post-due diligence.
• Shark Minh: Considered the valuation too high relative to current revenue and highlighted the presence of many unknowns.
• Shark Vân: Felt that the company didn’t provide enough value to startups and decided to pass.
• Shark Thái: Offered VND6bn for 30% equity, to be disbursed over one year, implying a pre-money valuation of around VND14bn.

Founders’ Response:

The founders stated that they have received purchase orders from large domestic and international agricultural corporations and have secured funding from investment funds that have accepted their valuation.

Overall Assessment of the Deal:

• Agriculture’s Potential: Vietnam’s agriculture sector has immense potential, capable of serving a population of 500 million. With a significant portion of the population engaged in agriculture, coupled with global food shortages, the industry is poised for substantial growth and exports.
• The Academic-Entrepreneur Gap: While the founder possesses deep scientific knowledge, typical challenges faced by academics transitioning to entrepreneurship include:
  • Overemphasis on specialized knowledge
  • Rigid thinking and a lack of adaptability
  • High ego and difficulty in collaborating
  • Weak business skills, particularly in sales and finance
• The Founder’s Strengths: The founder is a rare combination of a scientist and a businessman, demonstrating:
  • A strong value proposition with a reasonable price point
  • Excellent interpersonal skills and humility
  • A flexible and receptive mindset
  • Strong sales acumen, evidenced by their ability to articulate the product’s value and address potential customer concerns.
• Lack of Concrete Data: The primary shortcoming is the absence of robust financial data to substantiate the founder’s claims. This is a key reason why the sharks are hesitant to invest immediately.
• Ideal Investor Profile: The most suitable investors for this venture would be large corporations or organizations with deep industry knowledge and a long-term perspective. These entities could provide the necessary resources, expertise, and market access.
• Founder’s Decision: The founder must decide whether they want to focus on the scientific aspects of their work or take on a more active role in business operations. If the latter, hiring a seasoned CEO would be beneficial.

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