Seeing Shark Hung Anh close 1 million USD for 8% of shares, Shark Binh quickly took the deal.

Shark Tank Vietnam episode 13 season 6 featured exciting capital calls from startups: Paper World - a business that produces large roll paper products and multi-purpose wipes from virgin wood pulp.

Over 20 million people use the product every day

“I often joke that Shark just stands at Notre Dame Cathedral and sees the roof of any building, that building is a customer of The Paper World. In the past 14 years, The Paper World has almost not lost a single customer. The customer referral rate is very high,” Mai Quoc Binh cleverly introduced the business model in the capital raising round at Shark Tank Vietnam episode 13.

In 2009, 2 days after graduating from university, Mai Quoc Binh started his business in the paper manufacturing industry. He said that his products are 100% virgin pulp, imported from Indonesia and Brazil - the two countries with the largest raw material areas. The two main brands bring a breakthrough to his company.

Mai Quoc Binh introduces a multi-purpose paper towel product that is durable, non-fragile, almost dust-free, and can be used to wipe the face, hands, kitchen, absorb oil, and take care of babies. Next to it is a large roll paper product, saving 20% ​​of the cost for users.

His company’s products are distributed mainly through the B2B channel (Business to Business). After more than 14 years, the company has had more than 18,000 customers who are agencies, organizations, and businesses, and more than 20 million people use the products every day.

His company has equity of 50 billion, total assets of 140 billion, currently has a loan of 50 billion and the only remaining depreciation expense is the factory. Regarding the shareholder structure, Mai Quoc Binh holds 70%, his wife holds 20% and the remaining 10% belongs to a Japanese investor.

Quoc Binh revealed that his unit has always achieved a growth rate of over 20% per year over the past 5-6 years. In 2022, the company's revenue was 265 billion. In the first 10 months of 2023, the revenue was 250 billion and ebitda (earnings before interest, taxes, depreciation) was 12%. It is expected that in 2024, the revenue will reach 450 billion, in 2025 it will reach 800 billion and the roadmap to 2028 will be IPO (Initial Public Offering).

Analyzing the possibility of a 200% growth breakthrough in the next two years, Binh "paper" said that in 2022 the company began to develop in the provincial market through key accounts (important customers with the potential to buy products in large quantities). After about half a year, each branch's sales reached about 500 - 600 million/month.

In particular, the Kien Giang province branch brought in 1 billion VND in revenue per month. Realizing that this was an opportunity for The Paper World to develop dramatically, Mai Quoc Binh came to Shark Tank Vietnam to look for a stronger financial resource, especially management, financial and strategic thinking to accompany the company. The capital he called for was 1 million USD for 6% of shares.

The founder revealed that the company's gross profit is about 34 - 35% and can still be optimized to increase net profit by ways such as developing the M2C (Manufacturing to Consumer - from factory to customer), selling to the employees of B2B customers to cut intermediary costs or expanding sales in the provincial market.

“The first strategy is to continue expanding its key account channel not only in the Southern region but also nationwide. The second step, in a maximum of 5 years, is the M2C channel - directly from the factory to the consumer. And what The Paper World has that no other company has is an ecosystem of millions of users. For example, now Shark invests in the paper industry, Shark wants to access the M2C channel, Shark has to spend many times more money than The Paper World does to approach andeducate customers,” Mai Quoc Binh analyzed the company's development strategy.

However, the problem that Mai Quoc Binh proposed was not enough to convince Shark Minh Beta and Shark Tue Lam to make a deal. Shark Minh refused to invest because he believed that in order to go far and be successful in the long term, startups need to analyze and evaluate carefully to choose a good enough strategy for the medium and long term vision. Shark Tue Lam also refused to invest because he realized that it would not create much value for the company, while the startup was still doing well.

3 Sharks are willing to make a deal of 1 million USD

Making a deal based on 'what the startup has', Shark Hung valued The Paper World at 3 times ebitda or 5 times earnings (revenue), corresponding to an 18% stake for 1 million USD.

With a taste for investing in businesses with stable growth, Shark Hung Anh proposed investing 1 million USD for 10% of shares, equal to the company's valuation in the previous round of capital raising.

On Shark Binh's side, he also offered to invest 1 million USD for 10% of shares with conditions on advisory shares when his company owns a series of advantages such as being more convenient to support startups than Japanese investors, having technology platforms serving M2C sales, online sales.

Needing a technology system to replace the traditional way of "running on rice" but not wanting to reduce the valuation compared to the previous round of capital calling, Mai Quoc Binh negotiated with Shark Binh an investment of 1 million USD for 8% of shares.

“In the next 2 years, Shark will have doubled. With an existing ecosystem, bringing in Shark's technology will also create many effects that both sides can cooperate on. This is like a perfect combination. I think such a number is reasonable for all three sides,” Mai Quoc Binh convinced.

When Shark Hung Anh said he was willing to accept 8%, Shark Binh immediately nodded to the number the startup offered.

After discussion, Shark Binh and The Paper World reached an agreement to invest 1 million USD in exchange for 8% of shares with the condition that Shark can increase the investment amount to increase the ownership ratio and have advisory shares, marking another successful deal to raise another million USD in capital on Shark Tank season 6.

Source: https://www.baogiaothong.vn/thay-shark-hung-anh-chot-1-trieu-usd-lay-8-co-phan-shark-binh-voi-vang-gianh-moi-192231225224447322.htm