Development Stage: Transitioning from Seed to Series A funding.
Use of Funds:
- Customer Validation and Expansion: Reinforce product-market fit and scale the business model.
- Product Diversification: Introduce new product lines, expand manufacturing capabilities, and increase marketing efforts to attract more customers.
Key Points to Present to Investors:
- Product-Market Fit: Demonstrate a diverse product line that aligns with customer preferences and market demands.
- Market Potential: Highlight the substantial market opportunity.
Highlights:
- Products:
- A variety of chili products including chili paste, chili paste with garlic, and chili sauce.
- Unique selling point: 100% fresh chili fermented with rice vinegar for 12 months, retaining the natural flavor, color, and nutrients.
- 30 years of experience in aquaculture microbiology.
- Addressing Vietnam’s Agricultural Challenges:
- The company aims to improve the quality of Vietnamese agricultural products and provide better market access for farmers.
- Market Penetration:
- Launched in June 2020 and has already exported to 9 countries.
- 99% of sales are on Amazon and Walmart.
- Manufacturing Capabilities:
- A new 10,000 square meter factory can process 30 tons of fresh chili daily.
- Certified by international standards like PRC, HSAP.
- Holds intellectual property rights in 35 countries.
- The factory is the first of its kind in Vietnam and the third largest globally.
- Market and Production:
- A massive market potential with a stable production process.
- Unique flavor profile due to the use of rice vinegar instead of acetic acid.
- A secure supply chain of fresh chili from the Mekong Delta region for 15-20 years.
Financial Performance:
- 2023: Revenue of VND25bn, net income of VND6bn (24% net profit margin). EBITDA is estimated to be higher at around 29-31% or VND7.75bn
- Pre-money valuation: Estimated between VND67-77bn
- 2024 Forecast: Revenue is expected to remain at VND25bn due to the 12-month fermentation process.
Deal Structure:
Funding: Seeking USD500,000 for a 5% equity stake to invest in machinery and raw material inventory.
Shark Negotiations:
- Market Response: The company has received custom orders from trade shows.
- Shark Minh: Concerned about the sustainability of the profit margin.
- Shark Vân: Doesn’t see significant added value and has opted out.
- Shark Minh: Considers the valuation too high and has opted out.
- Shark Thái: Prefers deals that allow him to showcase his unique investment style.
- Shark Bình: Offers USD500,000 for 16% equity, valuing the company at VND65-66bn.
Financial Position:
Balance Sheet: Chilica has contributed VND40bn in capital, with total assets of VND46bn. This implies a debt of VND6bn.
Final Negotiations:
- Shark Hưng: Offers VND500,000 for 12.5% equity or USD250,000 for 5% equity, valuing the company at USD3.5mn.
- Shark Bình: Offers 1 million USD for 25% equity, valuing the company at USD3mn.
- Chilica: Counteroffers with USD1mn for 10% equity, valuing the company at USD9mn or approximately VND225.9bn.
Overall Assessment of the Deal:
- Realistic Valuation: A revenue of VND75bn seems more reasonable, which would lead to a pre-money valuation of around VND225.9bn with a 30% EBITDA.
- Operational Efficiency: If the company focuses primarily on contract manufacturing and exports, operational expenses of the factory would be minimal, requiring a small team of around 10 people.
- Growth Opportunities: The company could attract more investors if it prioritizes sales, distribution network development, and brand building.
- Scaling Up: To refine the cost structure, especially indirect costs related to product distribution and reaching end consumers, the company should scale up its operations.
- Negotiating Valuation: Given a projected revenue of VND75bn and an adjusted EBITDA, the founder should engage with more investors, including institutional ones, to refine the valuation.
- Market Feedback: If multiple investors consistently express concerns about the valuation, it might be necessary to adjust it.
- Scaling Further: At a VND200bn annual revenue, the company could attract PE funds to secure VND10-15mn for expansion.
- Strategic Partnerships: A 36-51% stake could be sold to a strategic investor in Northeast Asia to access their distribution networks.
- Founder’s Strengths: The founder is described as stable, skilled, and knowledgeable about the business and market. It’s recommended to partner with a larger entity to achieve greater ambitions.
- Seize the Opportunity: The founder should take advantage of the investor’s offer, as it aligns with the founder’s capabilities and the company’s growth potential.
#equitix
#lucas
#phunglelamhai
#sharkTankvietNam7
#Chilica
#Vietnam_agriculture