Legendary – Chocolate Brand and Products with the Cacao Station Model
Development Stage: Pre-Seed, transitioning to Seed.
Key Points to Showcase to Investors:
- Product-Market Fit: Demonstrate a strong fit between the product and the market.
- Business Model Validation: Validate the business model before scaling.
- Co-Founder Team: Assemble a strong team of co-founders to execute the business plan.
Highlights:
- Operational History: 9 years of operation
- Distribution Channels: Aeon, Coop Mart, Big C, Airports, etc.
- Certifications: ISO 2000, FDA, Halal
- Export Markets: Middle East, Canada, etc.
- Manufacturing Facilities: Two factories in Ho Chi Minh City (1000m² and 400m²)
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- Established a laboratory in 2019: Achieved excellent microbiological standards
- Founder personally sources raw materials, tests them in the lab, and then initiates production.
- Product Range: 60 SKUs
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- Raw Materials: Cocoa, ingredients for cosmetics, scented candles, body scrubs, etc.
- Core Product Line:
- Chocolate with yogurt-filled banana
- Chocolate bars
- Fruit-filled chocolates
- Bestseller: Chocolate with coffee beans (40% of sales)
- Founder’s Vision: Position the brand as a lifestyle brand.
- Initial Investment: CAPEX for one store: VND500,000,000 (Inventory, decor, etc.)
- Financial Performance and Data:
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- 2023: Revenue VND38bn, Profit VND982mn
- First 6 months of 2024: Revenue VND22bn, Profit VND1.5bn
- Projected 2024: Revenue VND50bn, Profit VND4bn
- COGS: 40-50%
- If selling raw materials to partners: ~60% COGS
- Gross Profit Margin: 40%
- Cacao Station Model: No franchise trials yet.
- Reference data from supermarkets:
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- Revenue per 20m² store: VND500mn
- Monthly Revenue: VND300mn
- Projected payback period:
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- Self-funded: 6 months
- Franchisee: 9 months
- Funding Deal: Founder’s offer: 10 billion VND for 10% equity, pre-money valuation: 90 billion VND
Sharks’ Investment Perspectives and Negotiations:
- Shark Minh: Why diversify your product line when you already have a flagship product?
- Shark Minh: Are you an artisan or a businessperson?
- Founder’s Response: Both.
- Shark Nga: I’d like you to focus solely on chocolate.
- Shark Till Man: Focus on chocolate.
- Shark Binh: I will not invest.
- Shark Vân:
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- I won’t invest until you’ve piloted the franchise model.
- After calculating the cost structure, Shark Vân concluded that a 13% net profit margin is insufficient for franchising
Deal Closure:
Shark Minh: Offers 4 billion VND for a 16% equity stake, with a potential additional 6 billion VND in convertible bonds maturing at the end of 2025.
Overall Assessment of the Deal:
- Founder Background and Lack of Co-Founder:
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- The founder’s accounting background provides a strong foundation in risk management but may hinder rapid growth due to a more cautious approach.
- The absence of a co-founder could limit the company’s ability to scale quickly.
- The founder’s understanding of financial risks is a significant asset, ensuring a more sustainable business.
- Founder’s Dual Role:
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- The founder’s ability to balance both creative and analytical aspects of the business is commendable.
- However, the dual role of founder and CEO can be challenging, as the demands of each role can conflict.
- The founder’s artistic side might hinder the business’s ability to scale efficiently.
- Need for a Co-Founder:
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- A co-founder with complementary skills is essential for the company’s growth.
- Shark Minh is a suitable candidate for the board but may not be the ideal co-founder.
- An all-in co-founder who can focus on execution is needed.
- Business Model and Distribution:
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- The company should focus on wholesale distribution to modern trade channels (MT) and HoReCa (hotels, restaurants, catering).
- The founder’s vertical integration (sourcing raw materials, production) is a strength but may limit scalability.
- Valuation and Growth:
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- The company’s valuation is relatively low due to the founder’s solo efforts and the lack of a proven business model.
- Past growth rates may not be indicative of future performance, especially considering the small revenue base.
- Key Issues:
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- Lack of focus: The company needs to define its target market and product offerings more clearly.
- Decision-making: The founder’s tendency to focus on details may hinder strategic decision-making.
- Business model uncertainty: The company’s business model has not been fully validated.
- Deal Analysis:
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- The pre-money valuation is significantly lower than the asking price due to the company’s current stage and risks.
- Shark Minh’s involvement can provide valuable strategic guidance and resources.
- The founder’s entrepreneurial spirit and risk-taking are commendable.