It is tough to get investors excited about a toy startup. But for Nguyen Cong Nam Hien, the founder of Vietnamese toymaker Mato.vn, it was about converting his childhood passion into a visible business plan. Along the way, investors took notice. Incubated at Hatch!, the company recently raised an undisclosed amount of funding, after getting three angel investors excited about its offerings. Cong Nam’s broader vision for Mato.vn – which has already sold over 10,000 units through 60 retail stores in Hanoi, Hai Phong and Ho Chi Minh – is to expand the customer base by aligning with schools and retailers. Nam Hien says the company’s long term success lies not just in expanding or venturing abroad, but in its ability to connect with kids and making fun toys that can aid the learning process and get children engaged. Edited excerpts from the interview.
What is Mato and how did the idea come to life?
Mato.vn is a manufacturer and inventor of educational toys, mainly targeted at young kids aged 5-10. The idea of starting a company specialising in toy manufacturing came to me at the time when I had a business that involved importing toys from the US. It bothered me that Vietnam did not have a quality toy manufacturer like a LEGO or Hasbro. Vietnamese parents had no choice, but to buy cheap, shoddy plastic toys that were made in China. Meanwhile, the kids would quickly grow bored of them because they were neither creative nor playful. There was a gap in the market, which needed indigenously made, beautifully-crafted toys; and this is when Mato came to life.
How many investors does Mato have? How do you plan to use the invested funds?
Mato has been funded by three domestic angel investors but due to shareholder agreement, we cannot disclose the exact amount or names. We plan to spend a part of this money for production and advertisement of our products in the print media. We do not plan to consume the seedfund all at once. Unlike typical tech startups, this company does not need a large up-front spend on physical, technical or human infrastructure. The seedfund will be used carefully, in tandem with our revenues, which will be actually re-invested for further production. Apart from production, most of the money outlay is kept aside for capital funding. Once the sales pick up, the cash flow will cycle will be in place. The faster the rotation of money, the more profit we make. From the moment our products are up on retailers’ shelves, till the time we collect the revenue, is roughly a two month time period.
How much do you spend on research and development?
We do spend a lot of money on R&D. The head of R&D is a co-founder and we do pay a hefty amount of money to the R&D team, which is the backbone of our business. Our R&D routine is quite in-depth and we have a five-step test before putting a prototype to production.
The five-pronged approach includes:Hosting funfair for young kids to introduce them to our products, teaching them how to play with it while our team take notes of their reactions.This is followed by the parent test. We advertise our products on websites like webtretho forum, afamily.com, shoptretho.com.vn, lamchame.com before hosting seminars/meetings with parents to seek feedback for our toys. The third step is to seek feedbacks from educational consultants. We take our toys to kindergartens, elementary schools, to get feedback from both the teachers and the students. The next stage involves seeking feedbacks from our product retailers. In this phase, we usually seek advices on how to sell our products better, and the final stage is a stringent internal testing within before finalising the product.
What are your future plans for business expansion?
We already have an expansion blueprint in place. Stage one involves establish a series of flag-ship toy stores. That way we can have a shorter cash flow cycle. It would also help in building our brand. We plan develop trademark toy characters based on which, we can create more entertaining products such as animated television series, comics, action figures or stuffed toys.
We will conduct market research to help export our toys to foreign markets.For this, we will need to add more lines and in-depth stories to our characters. All product lines will need to be translated into foreign languages also. We will also focus on domestic expansion by setting up our own factories. To achieve that, we need to stay alive and build our brand in the market in the next one to two years. The ultimate idea is to make our products become a series of toys that is both educational and playful. Currently, Mai Dich Elementary School and Tomoe Vietnam Kindergarten are using our products and they really enjoy them. Finally, we want to produce high-tech toys.
How does Mato’s plan to attract additional investments?
We plan to penetrate the market deeper, to achieve a certain percentage of market share in the following year. In truth, we haven’t used up our seed fund as I said we don’t have to spend all our money at once and that is why we are not actively seeking any external investors right now. Instead, we would like to focus on building our workforce and goodwill before taking the company to the next level.
In case, more investment does flow in, we’d definitely choose the second plan mentioned above: to build a series of animated cartoon based on our characters. This has been a trend in some developed countries such as Japan, USA, United Kingdom, where toys, action figures, comics, animated cartoon are all based on some core characters.
Mato team really believes that we can make a name for ourselves in the domestic market. Further investment would help us do better products as well as expand our reach and presence to more cities across Vietnam and to the foreign markets too.