Why We Invest (and Believe) in TechCoop - the Leading Vietnamese Agri-tech Player?
TechCoop leverages technology to solve end-to-end challenges in the agriculture supply chain, has raised successfully a Series A of US$70M, led by TNB Aura.
Hi everyone 👋 Welcome back to Leveraged!
Series #Action by Leveraged will start with an article that describes my work @ TNB Aura
Let's explore our recent investment in TechCoop. This company perfectly embodies our investment strategy and philosophy, meeting our criteria for (i) a large addressable market, (ii) a highly defensible and scalable business model, and (iii) excellent management coupled with robust corporate governance.
🏢 Introduction of TechCoop
Based in Ho Chi Minh City, TechCoop has experienced remarkable growth since its founding in 2023. Initially focused on providing trade financing to agricultural SMEs and cooperatives, the company has expanded its offerings to include input financing, marketplaces, digitalization, and export services. TechCoop is led by 2 co-founders Hao Diep and Tuan Nguyen, who are seasoned in banking, agriculture and tech developments.
TechCoop has consistently achieved double-digit monthly growth, culminating in approximately US$140 million in annualized sales by the end of fiscal year 2024. With a clear strategy in place, the company is poised to reach a topline of US$500 million within the next three years. Notably, TechCoop has maintained profitability since its inception.
TNB Aura is thrilled with TechCoop's achievements and future potential. Over the past few months, we've led their Series A financing round, securing US$70 million in total equity and debt capital. We were joined by other investors including AVV, BlueOrchard, FMO Ventures, Appworks, and others debt capital providers.
💫 Investment thesis
Below, I'll outline our investment thesis, providing as much quantitative detail as possible. However, please note that this summary won't fully capture all the factors that influenced our investment decision.
Executive Summary:
TechCoop operates in a large and rapidly expanding market, which their business model is well-positioned to capitalize on.
The chosen business model is highly defensible and scalable, aligning with our investment preferences.
TechCoop has established a strong foundation of sustainable corporate governance, allowing for growth within a robust risk management framework.
Thesis 1️⃣ Vietnam and Southeast Asia's agriculture sector offers a huge market, where small-scale upstream producers struggle with issues like working capital and bringing their products to market.
1.1. Market opportunity assessment
First of all, to determine the “real market size” of a company, we need to understand the problem size in the value chain and align that company’s product offerings with the targeted market segmentations.
The upstream agricultural value chain (farmers, cooperatives, SMEs, input suppliers, and financial institutions) presents significant opportunities. While the downstream value chain (trading, logistics, and retail) is big, but competition is fierce and requires substantial capital and logistics. The upstream sector, despite its higher value-added contribution, faces key challenges:
⚠️1: Input Access: Small cooperatives and SMEs struggle to access competitively priced inputs and often face immediate payment requirements
⚠️2: Financing: Securing affordable financing is difficult due to limited collateral. They often resort to expensive informal lending.
⚠️3: Trader Dependence: Cooperatives and SMEs rely on traders who control output prices due to their credit offerings and buyer connections, limiting profit growth for smaller players.
TechCoop addresses these challenges by digitizing data across the value chain and offering end-to-end solutions, from input procurement and output sales to working capital support (a "buy now, pay later" service). They target cooperatives and SMEs, estimating their serviceable market at US$23 billion in Vietnam and US$54 billion across Southeast Asia. Our estimation is based on the input and output turnover of the crops TechCoop currently serves or plans to serve, focusing on customers experiencing the aforementioned challenges.
1.2. Macroeconomic Tailwinds:
Vietnam's agricultural exports reached US$62.4 billion in 2024, leading Southeast Asia's US$155 billion total, with a strong 10% export value CAGR.
Vietnam is a top global exporter of high-value crops like rice, coffee, cashew nuts, durian, and shrimp. Its agricultural exports exceed its agricultural GDP contribution, indicating strong export orientation and food security (this is due to many factors, when GDP measures value added at each stage of production, whereas the export value is the final selling price, but only some countries can do this)
Crucially, cooperatives and SMEs dominate upstream production for key Vietnamese crops, representing TechCoop's target market.
The estimated annual financing gap in Vietnam's agricultural system is US$18 billion.
Vietnam's 17 free trade agreements and many bilateral trade agreements further enhance export opportunities for its high-quality agricultural products.
These factors make agritech a promising investment area, especially in markets dominated by smaller producers.
Thesis 2️⃣ TechCoop represents the “unicorn methodology” method, aligns with our preferred business model in agriculture sector, which is highly scalable and defensible
2.1. Unicorn methodology & preferred business model
We've observed that in markets where smallholder farmers, farmer clubs, or SMEs are the primary producers, the agricultural value chain is often inefficient. This creates opportunities for agritech companies to add significant value.
Consequently, agritech is a key focus of our investment strategy at TNB Aura. Therefore, we need to determine which agritech business model is most attractive to us. Let's review the options.
🏢1: Input Marketplace: Offers access to inputs at competitive prices. Pros: Sizable market and attractive margins. Cons: Requires strong logistics and capital.
Playbook: Marketplace playbook:
(i) Ensure best price by building a good purchasing power with principles
(ii) Strong logistics capabilities
(iii) White label or exclusive distribution
(iv) Innovative customer acquisition (product-led or go-to-market led. Product-led is when you acquire customers by providing unique input, like a special product or a farming tool, IoT that farmers can find nowhere else. Go-to-market led is you rely on your innovative sales and partnership strategy, like you are the super connector of all farmer clubs’ representatives in the market you serving 🙂)
🏢2: Farm-to-Retail Marketplace: Connects producers with end customers. Pros: Largest market size. Cons: Lower margins and intense competition.
Playbook: Marketplace playbook:
(i) Pricing control & logistics capabilities
(ii) Improve GPM by white label or exclusive distribution
(iii) Innovative customer acquisition strategy
🏢3: End-to-End Upstream Platform: Provides comprehensive solutions, including inputs, output commercialization, and working capital. Pros: Large market, healthy margins, strong customer stickiness, and network effects. Cons: Requires significant efforts to set up a comprehensive product offering at start
Playbook: End-to-end & Digitization
(i) Scaling & acquiring customers through on-the-ground digitalization and ERP systems to identify value chain inefficiencies and create effective matching networks between crops and customers
(ii) Implementing strong customer KYC and risk management processes
(iii) Developing a robust network of value chain stakeholders, including input suppliers, IoT providers, financial institutions, and large domestic/export buyers
(iv) Consolidating volume and output to become a major player, enabling direct negotiations with large buyers.
We favor this model because it offers the highest defensibility and scalability within a sizable total addressable market and generates a potentially healthier gross profit margins.
🏢4: B2B agri-financing platform (just platform, not licensed lender) & 🏢5: Single IoT provider. Limited market size and often lack scalability or defensibility.
2.2. How TechCoop’s model aligns with our method
TechCoop offers comprehensive, end-to-end solutions, including digitization packages like customer apps and a network matching platform for efficient scaling. Their unique go-to-market strategy involves first understanding crop characteristics and stakeholder economics, then securing agri-buyers before targeting cooperatives and SMEs.
This approach allows them to collect valuable transaction data, identify value chain inefficiencies, and create input/output matching opportunities. It also enables robust customer profiling for their working capital product.
TechCoop has achieved impressive results: zero customer churn (except for operational downsizing of customers), rapidly increasing lifetime value (LTV/CAC currently at 90x, projected to reach 200x), no payment losses, and US$20 million in secured debt funding from local banks at favorable rates—a significant achievement for an early-stage company in Vietnam.
They are also focusing on export and output commercialization, aiming to become a "Super-Anchor" for overseas buyers, directly managing volume, price, and quality. In short, TechCoop is successfully executing the playbook for an end-to-end upstream value chain platform.
Thesis 3️⃣ TechCoop's management team has prioritized strong corporate governance from the outset, maintaining high standards for risk management, integrity, and internal controls
My interactions with the founders since mid-2023 have consistently impressed me with their professionalism and focus on governance and risk, boosting my confidence in their business.
The team's combined banking and agriculture supply chain expertise is a valuable asset. They follow proper board procedures and maintain effective communication with investors.
Their commitment to risk management, particularly in their working capital financing product, is evident in their efforts to minimize losses. TechCoop has already implemented and continues to develop best practices for investor relations.
This consistent dedication to responsible governance has made working with them, over the past year and a half, a very positive experience for myself and TNB Aura.
🚀 Looking ahead
Looking ahead, while TechCoop has made remarkable progress, they have ambitious plans for further growth. These include regional expansion, enhancing supply capabilities to serve major export buyers, developing a financing platform to facilitate partnerships between financial institutions and customers, and building a global brand to increase export value.
We believe that with continued execution of their sound business model, strong leadership, and robust controls, TechCoop has the potential to become a truly great venture.
Thank you all of us for making it happen!!!
This article details our recent investment in TechCoop, part of my #Action by Leveraged series, showcasing my investment work at my firm. I hope you found it insightful, and I welcome any questions.