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.
As fathers themselves, the duo encountered the challenge of finding suitable educational toys for their children. This inspired them to create Kalotoys, a company dedicated to designing and developing educational toys for early childhood development.
“There was limited information available to help us choose the right products. This motivated us to delve into early childhood education and create our own line of educational toys. Our children are still our first testers,” affirmed the founders of Kalotoys.
The founders of Kalotoys
Citing the fact that 85% of children’s clothing is designed for the 0-5 age group, the founders emphasized the importance of investing in early childhood education. They continued to explain the challenges they faced as new parents in accessing information about family education and finding suitable toys and tools to support their children’s development.
Kalotoys identified its strength in solving parents’ dilemmas by creating age-appropriate toy sets aligned with specific educational methods. This enables parents to easily select toys that match their children’s ages and developmental stages.
Million-Dollar Revenue in the US and European Markets
Kalotoys presented impressive financial figures, including a million-dollar revenue from 2020 to 2021. In 2023, the company achieved a revenue of 95 billion VND with a profit margin of over 10%.
For 2024, Kalotoys set a target of 250 billion VND in revenue and profit, with an EBITDA of approximately 18%.
The founders shared that, in the first six months of the year, the company had already generated 79 billion VND in revenue. They attributed this success to the Christmas season, which 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 their website, while the remaining 60% came from e-commerce platforms.
Towards the end of 2023, Kalotoys became the only Vietnamese company to rank among the top 10 businesses with the highest number of orders on one of the largest e-commerce platforms in the US.
For the past four years, the company’s primary markets have been Australia, the US, and Canada.
“We recently launched in the Vietnamese market three months ago and have received positive feedback,” shared Duc Thanh.
When asked by Shark Binh about their primary market focus, the founders responded, “For the next 3-5 years, 90% of our focus will remain on the US and European markets. The Southeast Asian market will require more time. Our strength lies in product development, and we do not allocate many resources to sales and marketing.”
Instead, Kalotoys prioritizes prototype development and owns a production facility with a team of 40 people, enabling them to create new products daily.
Based on their strong financial performance and unique strengths, Kalotoys sought investment of 1 million USD for a 10% stake in their company.
The founders justified their valuation based on achievable revenue and profit goals for the current year. They shared their short-term development plan, which includes a three-year revenue target of 25 million USD and a post-depreciation profit margin of 13%.
Kalotoys’ strategy focuses on addressing the most challenging aspect of educational toys: conveying the educational value of a toy to parents, who are the primary purchasers. To overcome this hurdle, Kalotoys creates viral content and conducts live streams to guide and educate parents.
Additionally, all Kalotoys products adhere to the stringent quality standards of the US ASTEM. The toy materials, sourced from countries with cold climates like Russia and Ukraine, are not easily found in Vietnam or China.
Despite presenting impressive financial figures, the startup faced skepticism from Shark Binh regarding their funding rationale and whether they were primarily seeking publicity.
Kalotoys plans to open a factory in the US by the end of the year. While they have the capacity to do so with their current budget, they seek additional financial resources to ensure the factory is large enough to accommodate their operational scale.
When questioned by Shark Minh about their competitive advantage against Chinese companies, the founders confidently asserted their ability to compete with Chinese factories.
The Turning Point: 3 Sharks Offer Golden Tickets to Lure the Startup
With a long-term vision, the founders expressed their desire to find an investor willing to accompany them on their journey 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 100 million VND to secure exclusive negotiation rights with the startup. Not to be outdone, Shark Minh countered with a Golden Ticket worth 150 million VND. Shark Thai also joined the competition.
The offers escalated from 200 million VND to 300 million, then jumped to 500 million, 800 million, and finally reached 1 billion VND from Shark Binh.
Shark Binh eager to secure the deal with Kalotoys
The two sharks displayed their determination to secure the deal, with Shark Minh expressing his dismay at Shark Binh’s aggressive bidding: “I’m still new to this, and you’re biting hard, Shark Binh. I have a lot to offer these entrepreneurs.”
Shark Binh briefly responded, “So do I.”
As the bidding intensified, the offers rapidly increased, leaving the other sharks astonished. The final offer stood at an impressive 5 billion VND from Shark Binh, securing him the exclusive negotiation rights.
However, in a surprising turn of events, the founders of Kalotoys rejected the offer, leaving the sharks stunned. They explained their decision by stating, “We have borrowed larger amounts in the past. Money is something we can figure out.”
Returning to the negotiation table, Shark Binh offered 1 million USD for a 15% stake, while Shark Minh proposed 1 million USD for a 12% stake.
Shark Minh played his trump card, sharing that he had recently attended a Harvard class reunion, where he connected with alumni holding influential positions at Amazon. He emphasized the significant capital required to secure a presence on Amazon and offered to leverage his network to support Kalotoys’ growth.
Additionally, Shark Minh committed to raising a minimum of 3 million USD for Kalotoys if they achieved a revenue of 220 billion VND in 2024.
Shark Binh, on the other hand, offered to advise the startup 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. They proposed a partnership where they could benefit from Shark Minh’s connections and Shark Binh’s e-commerce expertise, shifting the negotiation from competition to collaboration.
The two sharks agreed to invest 500,000 USD each for a 5% stake, maintaining their initial support commitments. The episode concluded with Kalotoys accepting the deal, marking a successful outcome for all parties involved.
The deal is sealed
