What are Shark Minh Beta's requirements for investing 39 billion VND?

A brand that relies on apartment buildings is valued at 300 billion VND?

LaGaia is a one-stop shop model, providing essential health, relaxation, and beauty services in one location, primarily targeting women but also not forgetting the essential needs of men, the elderly, and children.

What sets this model apart is its "leverage on the boom in the vertical economy ." LaGaia "targets apartment buildings, right at the foot of the building, where customers can access services simply by taking the elevator." LaGaia's model thrives on three key elements: low investment costs, low operating costs, and low service prices.

Shark Tank tập 8: Shark Minh Beta chi 39 tỉ đồng với yêu cầu gì - Ảnh 1. — Co-founders Ngoc Nguyen (left) and Dinh Huyen Trang (right) are seeking to raise 39 billion VND for 10% of LaGaia's shares – a chain of essential beauty and wellness products for the whole family, based on Korean standards.

LaGaia's first store opened in March 2023, and after just five months of operation, the company has expanded to seven new stores across all three regions of Vietnam: North, Central, and South.

Regarding profit margins, Ngoc Nguyen shared that in 2023, the entire system's revenue is expected to reach 24 billion VND, and EBITDA (earnings before tax, interest, and depreciation) could reach 50%.

Faced with this figure, Shark Hung Anh expressed his bew astonishment: "I can't understand it; I still can't figure out why she made a 50% profit." As a former math student at Amsterdam High School, Shark Minh Beta did some quick calculations: If sales are down, a store is making about 10 million VND a day, or about 300 million VND a month. Subtracting expenses like rent, raw materials, marketing costs, and other expenses, the total is about 50%. Shark Minh then clarified that the profit margin of the model could reach 50%, as Co-Founder Ngoc Nguyen had previously shared.

However, Shark Bình argued that this percentage is only relative and unrealistic: "It's only realistic when your sales point has reached full capacity. It has to run for at least two years."

Shark Tank tập 8: Shark Minh Beta chi 39 tỉ đồng với yêu cầu gì - Ảnh 2. — Co-Founder Ngoc Nguyen

Following Shark Binh's assessment, the founders and operators of LaGaia shared that they had thoroughly researched market needs and potential customers. "In each district, we will focus on recruiting 10-20 people to bring customers to us within the first two months," shared Ngoc Nguyen. Furthermore, the Co-Founder affirmed that LaGaia does not follow the traditional spa model but only provides essential services for the whole family to use regularly, on a weekly basis.

Shark Tuệ Lâm questioned: "We're asking for 39 billion VND for 10%. So, let's say I have 39 billion VND now, why don't I just open my own chain, owning 100%, instead of investing in a chain where I only have 10%?"

With a brand that is still very new to the market, Shark Binh expressed his disagreement with this valuation method: "You've only invested 10 billion VND here, and you're hastily valuing the business at 35 times the amount you've invested."

Shark Hung Anh and Shark Tue Lam decided not to invest, stating: "If the profits were this huge, we'd do it ourselves, instead of spending 39 billion VND to own 10% of the shares." Shark Binh and Shark Erik also did not participate in the deal.

Having spent 39 billion VND to close the deal, what did Shark Minh Beta demand?

Meanwhile, Shark Minh Beta continued to inquire about the founding team's experience. It was revealed that besides Ngoc Nguyen, who has 13 years of experience in the beauty industry, and Huyen Trang, who has been in the fashion business for 15 years, the LaGaia founding team also includes Tran Duc Minh, who has many years of experience in the F&B industry and has successfully built numerous brands and food chains with over 100 outlets, along with Hye Jin from Korea, who is in charge of R&D (research and development).

Shark Minh commented that LaGaia has similarities to the model of Beta Cinemas - his chain of affordable cinemas in the Artistic Urban Lifestyle style: "Actually, I think this model has potential. My family also runs a spa business and recoups our investment very quickly. In particular, I see certain similarities with the Beta Cinemas model, following a low-cost approach and offering affordable prices."

Shark Minh Beta offered 39 billion VND for 25% of the shares, to be disbursed in stages with conditions regarding opening a branch and the participation of the South Korean investor.

Beta Sharks bluntly stated the deal: "9 billion VND will be disbursed in early 2024 to get 15%, and 30 billion VND will be disbursed in early 2025 to get another 15%, provided that we open 20 trading points by early 2024 and 45 trading points by early 2025, achieving a 7-month payback period. And the Korean investors must also participate."

After discussions with the executives, Co-Founder Huyen Trang still requested to retain the 39 billion VND investment for 10% of the shares, along with commitments to expand the business in stages. Shark Minh repeatedly shook his head, stating that he could not accept this investment level.

After much negotiation, Co-Founder Ngoc Nguyen emotionally shared: “Actually, standing here today, what I most want to convey to those who have started or are starting businesses in the beauty industry is: we will create professional and well-structured brands. My industry is often judged as lacking in knowledge among entrepreneurs. I want to convey that if I am here today, you too will create Vietnamese brands that can spread internationally or affirm yourselves as truly knowledgeable business people – aiming to become entrepreneurs. And also aiming to make this beauty industry more beautiful and civilized.”

Recognizing that "it's not easy to open a chain like this on your own," and impressed by the founders' efforts, Shark Minh Beta offered 39 billion VND for 25% of the shares, to be disbursed in stages with conditions regarding store opening and the participation of the Korean investor.