Venture capital firm Yolo Investments’ €74m gaming fund comprises holdings in 22 different businesses spanning the betting and gaming sector. It made its first portfolio exit in December, booking a 5.8x ROI when Estonia-based online gaming and sports betting operator Coolbet was acquired by GAN Limited in a €149.1m deal.
CasinoBeats sat down with Yolo’s GP, Tim Heath, and the managing directors of two companies in which Yolo has invested – Casino Days’ Ross Parkhill and Green Jade Games’ Ben McDonagh – to discuss the fund, creating synergies and spotting the right type of gaming start-up.
CasinoBeats: What is the thinking behind the Yolo Investments gaming fund?
Tim Heath: The Yolo Investments gaming fund is really the logical progression from the approach we’ve taken at the Coingaming Group for more than a decade. We were always firm believers in building our own ecosystem.
If you don’t control your own tech and services, you don’t really control your product, and that limits what you can deliver to your customers.
We quickly found ourselves building products up and down the value chain – a content studio, a platform aggregator, a live casino provider.
At the same time, we were working with third-parties and looking for ways to build closer relationships that would be mutually beneficial for everyone.
The Yolo Investments gaming fund is really the culmination of this approach, and a single place where we could find the synergies between a diverse range of gaming businesses in a way which works for everyone.
CB: How did Yolo come to invest in your business?
Ben McDonagh: I’m going to borrow from our co-founder Jesper’s memories here, as it was Jesper who first met Tim in relation to Green Jade Games, but I’m pretty sure it started out from Tim and Jesper being at the same dinner, and Jesper being the proud inventor that he is, was pitching our games from his phone.
Tim, a player and customer first, picked up the conversation and found that we were wrapping up an investment round. Our vision then hasn’t wavered since and Tim immediately bought into our ‘Why’ – the problem we are trying to solve.
Ross Parkhill: Tim got introduced to some other investors that had helped create Rhino Entertainment, which was then just a startup in our early stages. Timing and a bit of luck is always important in these things and it was no different here as Yolo were looking for an opportunity to invest in a company that could build a fiat brand, and then enter and scale in emerging markets.
We had already started building towards that vision, with the result being the launch of casinodays.com, so a good result for all parties in the end!
TH: For us, both Green Jade Games and Casino Days ticked all the boxes. These were young businesses founded by teams with a lot of experience in the space. Each had a clear vision for where they were heading, and a plan on how to get there.
They understood both the challenges, and the support they would need to overcome them. And above all, they were businesses with huge growth potential.
CB: What was appealing about taking an investment from Yolo over other venture capital firms?
RP: For Rhino, it was important we had investors that really understood what it is like to launch and grow a casino business in today’s climate. What Tim and his team have achieved with the Coingaming brands is phenomenal, but no doubt they had plenty of ups and downs along the way.
As soon as we started talking with Yolo it was clear they would have the patience to let our team go and build a product we could all be proud of, and then add some valuable advice to help Casino Days meet the various challenges we would face along our journey.
BM: Let’s not kid ourselves here, raising the first investments for a start-up is inherently challenging and unless you have a series of successful exits, investors aren’t scrambling to invest. However, the initial critical relationship was with Tim, rather than a venture capital firm, per se. When blessed with options, we looked at what additional values an investor could bring to Green Jade Games and backing Tim was his fantastic team at both Yolo, and his other companies.
CB: So, beyond the investment itself, what are the benefits of becoming part of the Yolo ecosystem?
TH: From our side, we’re targeting seed- and A-stage investment opportunities in the space because that’s what we know. We grew the Coingaming Group from a company of six employees to one of more than 600 in less than a decade.
And we did that without the ecosystem we have today. Now we know how to accelerate this process even further. The network Yolo has built up can quickly open doors which many start-ups usually have to be banging on for years.
BM: Whilst the team at Green Jade Games have a wealth of experience, Yolo have highly complementary knowledge and their own history of how to build on the way to successful execution. With Yolo, we share this knowledge and with data analysis being a natural part of their business, we can measure change with greater empirical accuracy, making the next build more likely to succeed against our intentions. Lastly, chatting with Tim is like having a window into the future – the spaces Yolo and his other funds play in intrigue and excite me as no industry is safe from revolution.
RP: We’ve been really fortunate to work closely with some of the other fantastic businesses involved in the wider Yolo stable, like Hub88, OneTouch, QWERTYlabs and actually any day now we’ll launch the super portfolio of Green Jade Games.
It’s also great to be able to share knowledge with some of the other casino brands on growth opportunities, markets and challenges etc. Personally, it’s also been really beneficial to be able to call on Tim and some other members of the Yolo team for advice as we’ve grown and had various decisions to make.