In episode 2 of Shark Tank Vietnam’s season 7, Kalotoys’ co-founders, Le Trung Anh and Dong Duc Thanh, presented their vision of bringing educational toys with a Vietnamese brand to the global market.
Inspired by their own children, the founders faced the challenge of choosing the right toys for their kids’ education.
“There was little information to guide our product choices. This motivated us to delve into early childhood education and develop educational toys. Up until now, our children remain our first testers,” affirmed the Kalotoys founder.
The Kalotoys Founders
Citing that 85% of children’s clothing is designed for the 0-5 age group, the founders emphasized the critical need for educational investments during this developmental stage.
“As first-time fathers ourselves, we found it challenging to access family education resources and find useful toys and tools for our children,” they shared.
Kalotoys identified its strength in solving parents’ dilemmas by designing age-appropriate toy sets aligned with specific educational methods. This empowers parents to select the right products for their children’s developmental stages.
Million-Dollar Revenue in the US and European Markets
The startup revealed impressive financial figures, including a USD 1 million revenue from 2020 to 2021. In 2023, Kalotoys achieved a revenue of VND 95 billion with profits exceeding 10%.
For 2024, the company set a target of VND 250 billion in revenue and profits, with an EBITDA of approximately 18%.
The founders shared that, for the first six months of the year, Kalotoys generated VND 79 billion in revenue. They expressed confidence in attaining their goals, as the Christmas season accounts for 55% of their annual revenue.
Following a B2C model, Kalotoys sells its products on e-commerce platforms and its website. In 2023, 40% of their customers made purchases through the website, while the remaining 60% came from e-commerce platforms.
In late 2023, Kalotoys was the only Vietnamese company among the top 10 enterprises with the highest order volume on one of the largest selling platforms in the US.
Over the past four years, the startup’s primary revenue sources have been the Australian, American, and Canadian markets.
“We recently launched in the Vietnamese market three months ago and have received positive responses,” shared Mr. Thanh.
When asked by Shark Binh about their primary market focus, the founders replied:
“Undoubtedly, 90% of our main market in the next 3-5 years will remain in the US and Europe. The Southeast Asian market will require more time. Kalotoys’ strength lies in product development. We do not allocate significant resources to sales and marketing.”
Instead, Kalotoys focuses on transforming ideas into prototypes and owns a production facility with a team of 40 people, enabling them to create new products daily.
Based on their impressive business metrics and strengths, Kalotoys approached the Sharks seeking an investment of USD 1 million for a 10% stake in their company.
The founders based their valuation on achievable revenue and profit goals for the current year.
“We have a clear development roadmap for the next three years. Our revenue plan for the next three years is USD 25 million, with a post-depreciation profit of 13%.”
Kalotoys’ strategy addresses the most challenging aspect of educational toys: helping parents, who are the buyers, understand the educational value of a toy just by looking at it.
“We create viral content and conduct livestreams to guide parents,” shared Kalotoys, highlighting their unique approach compared to Amazon’s more “industrial” methods.
Additionally, all Kalotoys products adhere to the US ASTEM quality standards. The toy materials, sourced from wood in cold regions like Russia and Ukraine, are unavailable in Vietnam or China.
Despite presenting impressive financial figures, the startup faced skepticism from Shark Binh regarding their funding rationale and whether they were seeking publicity rather than investment.
Kalotoys plans to open a factory in the US by the end of this year. While they have the budget to do so, additional financial resources would enable them to establish a larger-scale operation.
When Shark Minh inquired about their competitive advantage against Chinese companies, the founders confidently asserted their ability to compete with the production capabilities of their rivals.
The Breakthrough: 3 Sharks Offer Golden Tickets to Court the Startup
With a long-term vision, the Kalotoys founders expressed their desire to partner with investors for the next 10-15 years. This ambition surpasses their goal of an IPO within the next five years.
Shark Binh offered a Golden Ticket worth VND 100 million to secure exclusive negotiation rights with the startup. Not to be outdone, Shark Minh joined the competition with a Golden Ticket worth VND 150 million. Shark Thai also entered the fray.
The offers escalated from VND 200 million to VND 300 million, then jumped to VND 500 million, VND 800 million, and finally peaked at VND 1 billion from Shark Binh.
Shark Binh eagerly offers a Golden Ticket to secure Kalotoys.
The two sharks displayed their determination to secure exclusive negotiation rights with the startup. As the offers soared into the billions, Shark Minh exclaimed to Shark Binh:
“I’m new to this shark business, and you’re biting hard. I still have a lot to offer these entrepreneurs.”
Shark Binh briefly replied, “So do I.”
The bidding intensified, leaving the other sharks in awe. The offers climbed from VND 3 billion to VND 4 billion, and finally, Shark Binh sealed the deal with a VND 5 billion offer, securing the exclusive negotiation rights.
However, the founders of Kalotoys surprised everyone by rejecting the offer, explaining that they had previously borrowed larger sums and were confident in their ability to secure funding.
Returning to the negotiation table, Shark Binh proposed an investment of USD 1 million for a 15% stake, while Shark Minh offered USD 1 million for a 12% stake.
“I recently attended my Harvard class reunion after a decade. My classmates now hold significant positions in Amazon. I know that to succeed on Amazon, you’ll need more capital than what I can offer in this round,” Shark Minh shared, delivering a compelling argument.
Shark Minh also committed to raising a minimum of USD 3 million additional investment if Kalotoys achieved a revenue of VND 220 billion in 2024.
Additionally, Shark Binh pledged to provide guidance based on his extensive experience in e-commerce.
To seal the deal, Kalotoys expressed their desire to have both Shark Binh and Shark Minh as investors. Specifically, they wanted to leverage Shark Minh’s connections and Shark Binh’s e-commerce expertise, shifting the negotiation from competition to collaboration.
The two sharks agreed to invest USD 500,000 each for a 5% stake, maintaining their initial support commitments. The deal concluded with Kalotoys’ acceptance.
The deal is successfully sealed.
