Professional Documents
Culture Documents
VLeisure XML: XML is a modern and open technology standard that allows structured data to
be stored or transmitted that is widely use in travel industry (for booking distribution). To
keep it simple, XML is the technology requirements that online travel depends on to share and
exchange products and bookings.
VLeisure developed its core system XML API, enable local traditional agencies & operators to
make online travel/accommodation booking, plan tours, purchase travel insurance, and
related products with ease.
Value propositions:
- User-friendly online booking platform
- Price transparency
- Access to rich content
Company objectives:
o Consolidate the highly fragmented travel market in Vietnam to be #1 player (acquire a
portfolio of up to 10,000 travel agencies in Vietnam)
o Increase products variety, focus on increasing transaction per agency per month
o Focus on whitelabel solutions for airline & high traffic websites
o Expand beyond Vietnam
DEAL
The company is raising $500,000 at $4M agreed post-money valuation. BonAngels commits
$250k. Other investors are considering include: Nexttrans ($30k), Line Corp, 500 Startups,
GSShop.
Phan-the founder doesn’t want the cap-table to be too diversified, therefore he insisted to not
take small cheque.
Term-sheet: the Term Sheet summarize principal offering terms that BonAngels (the lead
investor) and V-Leisure have agreed. Below are the major terms:
o Valuation: $4M post-money => 2.3x GMV 2017 (VND 36,2B ~ $1.65M). Valuation
benchmark for e-commerce companies is 1-2x GMV. VLeisure’s current revenue
consists of only transaction value, considering VLeisure revenue model: transaction fee
for booking & software licensing fee and current growth rate, VLeisure can possibly
achieve $4M GMV by mid 2019.
o Type of securities: 50% Redeemable Convertible Preferred Share / 50% Common
Share => 50% can be converted to cash or common stocks
o Dividends: 1% of par value, cumulative and accrue
o Anti-dilution: Full Ratchet Basis – Conversion ratio shall be adjusted subjected to the
lowest subscribed price => For any shares of common stock sold by the company,
investors can convert shares at the lowest subscribed price.
o Redemption Right: Commencing after 3 years after closing date – Total subscribed
price + 6% (annual compound interest)
o Liquidation Preference: 2 times of total subscribed price plus any unpaid dividends.
Participating to distribution of the remaining value, as-converted basis
o Other rights include: Tag-Along Rights, RoFR, Pre-emptive Rights
BUSINESS MODEL
VLeisure acts as an aggregator, facilitates transaction between buyers (travel agencies) and
sellers (services providers), therefore, it’s core business model is to take marginal cut
between buyers and sellers.
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Current average profit margin is: 5.3%
Why travel agencies need aggregator & Why VLeisure business model makes sense:
o Access to products variety: an aggregator enhances the capability of communications
between services providers and traditional travel agents and bring lower cost,
innovation, ease of comparison and interoperability. VLeisure is able to connect with
global suppliers (Expedia only partner with iVivu & VLeisure in Vietnam), and upscale
travel brands (example: traditional local agencies would not be able to sign contract
with luxury brand like JWMarriot)
o Digitalization with less know-how and investment: Majority of traditional local travel
agents do not have a well-designed online-booking website, and most do not have
mobile app (where data shows that mobile booking is increasing significantly),
VLeisure is investing in R&D to quickly launch a Web & Mobile layer on top of its XML
core system and sell it as SaaS service (similar to Haravan), so that local travel
agencies can build their own website & mobile front-end using VLeisure back-end. This
will help local travel agents to becomes OTA and increase their competitiveness.
Such value offering will help VLeisure earns a strong positioning and competitive
advantage because it is able to lock in the B-customers inside the system,
harnessing customer data of the local travel agents.
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MARKET OVERVIEW & COMPETITIVE LANDSCAPE
Travel market value chain: Left - arrows represent flows of content/information. Right:
arrows represent financial flows.
Customer behavior is changing fast. In the past, consumers would purchase flights largely
through brick-and-mortal travel agents, now with internet and mobile become common,
consumers and agencies move online.
Some key points we can derive about Vietnam travel market such as (market opportunities):
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Competition
There are no direct competitors to VLeisure running similar business model as we know of.
However, there are direct competitors in each product line:
o Hotel: Expedia
o Flights: Sabre, Amadeus (GDS)
VLeisure appears to have a clear competitive advantage due to its positioning as an aggregator:
o VLeisure offers many products in 1 platform -> convenient for both B2B and B2C
travel agencies
o Aggregate demands help VLeisure gain bargaining power to negotiate better deals with
services providers even in high-end segments
o Leveraging technology and understand the value of data, coupled with Founder’s
domain expertise in both technology and travel help VLeisure scale fast while keep a
slow increase in operating expense.
Nevertheless, the company will need to stay very focused over the next 6-12 months to ensure
it builds the cloud-based Web & Mobile-as-a-Service for travel agencies to increase its
defensibility and bargaining power.
FINANCIALS
o P&L shows a healthy growth of 144% GMV YoY while operating expenses was slightly
lower.
o Transaction volume is growing at a healthy rate 30% - 78% MoM
o Gross margin is thin at 5.3% average. Per market standard, independent agents expect
to net average profits of 8%, and 7% for corporate agents
o Operating profit achieved in May 17 at VND 2,8B GMV.
Metrics:
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Online registered agencies: 1,200 Gross Merchandise Volume: VND 36B
Use of proceeds:
o Products:
Implementation API products
Implementation Web/App for small agencies
o Sales:
close 200 corporates account in Vietnam, Lao, Cambodia
grow to 15,000 offline agencies customers
grow to 5,000 online agencies customers
implement 100 API Web/App
o Expansion:
operating offices in Laos & Cambodia
sales offices in Philippines & Indonesia
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KEY RISKS
o Small margin: the company needs to quickly implement its revenue model to increase
gross profit margin
o Scalability: VLeisure will need to scale significantly from its current level for the
company to achieve meaningful profit.
RECOMMENDATION
I have visited the company and talked to the Founder in-person. The office is located in a
small alley in District 11 with ~10 staffs working full-time. The company has been
bootstrapping since 2013, and worked their way up to $1.6M GMV. I believe this is a proof of
capability to scale the company to be the leader in this field.
They have already had a verbal investment interest with a strategic investor who is also a
big partner: CTrip (one of the largest travel services providers in China). Consolidation is a
typical outcome in this industry, this could possibly be our exit scenario.
I recommend that we proceed with the investment of 50k for 1.25% of the company (if
possible we can raise the ticket size to 100K for 2.5%)
o VLeisure fits in 2 of VIC investment categories: (1) traditional business but apply
technology to create new values and scalability (2) Software-as-a-Services
o Tourism is a booming industry with 30% growth YoY. The industry has huge room
for improvement. Growth in travel demand leads to growth in travel products and
services. VLeisure is solving one major & practical problem for Vietnamese travel
agencies: provide digital presence, and access to variety of products.
o VIC Investment tag along with respectable Korea VCs, and the investment terms are
favorable to investors.
Term Sheet
This Term Sheet summaries the principal offering terms to investors purchasing
Common and Preference Shares of Mekong Leisure Travel, a Vietnam Joint Stock
Company
Investment Information
Company Mekong Leisure Travel, a Vietnam Joint Stock Company
Investors BonAngels Venture Partners(“BA”), VC1(“A”), VC2(“B”)
Post-Money USD 4M
Valuation
Investment BA - USD 250k (6.25%)
Proceeds A - USD ##k (#.##%)
(% of the stake) B - USD ##k (#.##%)
Price per Share ### USD
Stock Incentive Pool None
LTI Pool Phan Le - ### (5% of owned stocks)
Type of Securities 50% Redeemable Convertible Preferred Share
50% Common Share
Rights of Preferred Shares
Board Seat Simon Kang
Dividends 1.00% of par value, cumulative and accrue
Conversion Rights 1:1 basis into shares of the Common Stock
Anti-dilution Full Ratchet Basis
Conversion ratio shall be adjusted subjected to the lowest subscribed
price
Redemption Right Commencing after 3 years after closing date
Total subscribed price+6% (annual compound interest)
Liquidation 2 times of total subscribed price plus any unpaid dividends
Preference Participating to distribution of the remaining value, as-converted basis
Other Rights Representatives, Warranties and Undertaking
Voting Rights (for Common Shares)
Consent Rights
Tag Along Rights
Right of First Refusal
Pre-emptive Rights
Informative Rights
Covenants
Penalties (Damage Compensation)(Indemnity and Claims)
Confidentiality
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