Coolmate wants to be Vietnam’s next unicorn

*This article is adapted from * Tech in Asia.

Pham Chi Nhu appears surprisingly relaxed as the co-founder and CEO of a fast-growing startup.

Coolmate, the Vietnamese direct-to-consumer men’s apparel brand he launched in 2019, recently secured US$6 million in funding from Vertex Ventures Southeast Asia and India – a notable achievement amid the ongoing tech winter. The company is eyeing an ambitious goal: to become a unicorn by 2030.

At a time when Temu, Shein, and TikTok Shop dominate the conversation in Southeast Asia’s retail space, what gives Coolmate the confidence that it can survive amid such cutthroat competition?

Not fast fashion

Pham initially began by selling clothes on Shopee, but he soon found it unsustainable. The marketplace’s fees ate into his profits, and it was hard to retain customers with nonbranded products.

So with two other co-founders, he launched an online platform to sell men’s essentials, including shorts, activewear, T-shirts, polos, and underwear.

Coolmate targets customers who are unwilling or unable to pay premium prices for brands like Nike or Adidas but prefer quality products over no-name, low-cost items from China.

For instance, a men’s training T-shirt on Coolmate is priced at around 200,000 Vietnamese dong (US$8), about a quarter of what Nike or Adidas charges. Meanwhile, many men’s training T-shirts in Temu Vietnam are priced at under US$8.

“But we’re not fast fashion. Our customers are 18- to 34-year-olds who view clothing as a necessity and favor minimal designs,” says Pham in an interview with Tech in Asia at Coolmate’s Hanoi headquarters, which was buzzing with livestreaming sessions on November 11.

“Essentially, our customers are people like me,” the 33-year-old CEO adds.
Coolmate designs all its products in-house, deliberately steering away from fashion trends to prioritize functionality – a strategy that explains its focus on men’s apparel since its founding. Its proprietary tech is said to accommodate Vietnam’s tropical and humid climate, such as enabling its clothes to dry faster.

To keep costs low, the startup doesn’t operate any physical stores and mostly works with factories in Vietnam, which is considered a major global textile hub alongside China and Bangladesh. “We know which factories excel at specific tasks, which helps us keep production costs competitive with foreign brands of the same quality,” says Pham.

However, he notes that Vietnam’s garment supply chain is fragmented. Domestic factories often excel in tailoring but struggle to match China’s prices for supporting materials like buttons and zippers.

Coolmate is also banking on strategies like free 60-day returns and influencer marketing to boost customer loyalty and drive repeat business.
Currently, the majority of the startup’s sales still come from marketplaces like Shopee, Lazada, and TikTok Shop. Pham doesn’t view the brand’s presence on these platforms as a drawback, even as these marketplaces tighten seller margins to boost profitability.

“These platforms invest heavily in educating consumers, so you have to engage with customers there, whether you like it or not,” he explains.

With the new funding, Coolmate plans to launch its women’s activewear line in 2025. It will expand to the US through Amazon and begin its Southeast Asia expansion by entering the Thailand market via local distributors.
Potential risks

An industry analyst studying Coolmate’s model notes that building consumer trust in Vietnam will take time, as many local consumers prefer foreign brands. “Coolmate’s simple designs also have a downside – they’re easy to replicate, and consumers can easily switch to alternatives,” the analyst adds.

The brand has also started moving into offline retail. It has already made its way into retailer outlets like Aeon, WinMart, and Big C, while testing the waters with pop-up locations in malls.

The online-to-offline model is not new for D2C brands in Southeast Asia, as seen with Love Bonito and Pomelo. While physical stores can enhance the customer experience with a personal touch, they risk increasing operational costs if not managed effectively.

Coolmate must also navigate growth while dealing with industry challenges.

First, the startup may face tariffs under the new US administration if it begins selling to the country next year. Second, the recent entry of Temu into Vietnam has raised concerns about unfair competition, while providing local consumers with greater access to cross-border products.

Meanwhile, Temu was recently ordered to suspend its operations after missing the Vietnamese government’s November deadline for business registration, according to state media reports on Thursday.
A future unicorn?

Vietnam’s apparel and footwear market was worth about US$4.6 billion as of end-2023, according to estimates by Euromonitor International.

Pham believes there is “a lot of room to grow” for his startup by focusing on quality rather than competing directly with giants like Temu and Shein. He points out that Coolmate’s products aren’t that expensive when compared to alternatives in the Chinese platforms.

So far, the Vietnamese firm’s numbers indicate strong traction and healthy growth.
Coolmate’s revenue doubled in 2022, but growth slowed to 23% in 2023 to land at US$14 million. Pham remains confident that the startup can reach its US$45 million revenue target for next year, with the 2024 figure projected at US$23 million.

Its revenue target for 2030 is US$500 million at a valuation of US$1 billion.

While revenue growth slowed down in 2023, the startup still churned out an operating profit of US$141,000 that year, over 5x higher than in 2022.

That said, one potential cause for concern is Coolmate’s runway.
In 2023, the company ended with just US$52,000 in cash and cash equivalents, way less than the US$900,000 in cash used in operations it logged for the year.

This would suggest it needed more cash to stay in operation, which may be why it raised a US$6 million round in October this year.

The new funds extend its runway to more than seven years at its current operational expense level, providing resources to counter competition from Chinese giants like Temu and Shein at least in the near term.

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