Why we invested: Yoto

When we met the Yoto team we were instantly excited. They had taken an allegedly simple product to a whole new level by being extremely thoughtful in designing an experience that would foster children’s independence — and return the joy of peace of mind to parents. Founders (and fathers) Ben Drury and Filip Denker, both previously entrepreneurs in the music industry, had started ideation way back in 2016. Since the very successful crowdfunding for version 1 of the player, the team has done a tremendous job in iterating both the players and the content platform. With the launch of version 2 in 2020 and the mini version in 2021, they started to scale the business across the UK whilst also quickly becoming one of the leading screen-free audio players in North America. Yoto offers everything, from music of all genres to classic children’s tales, and almost all major franchisees. Yoto Original content makes the most of the tech platform. It is interactive, inspiring, and fun. Additionally, with the make your own cards audio gets a very personal note. Early believers, and supporters to this day include Global Founders Capital, Emerge Education, Acton – and Sir Paul McCartney.

Throughout the pandemic (and even before) it became evident that excessive screentime around the globe is associated with profoundly negative health impacts including obesity, anxiety, depression, loneliness, sleep problems. The list goes on. While adults are struggling to cut back on screentime, and especially social media (just think about last time you spent three straight hours on TikTok), children also risk spending their most formative years in front of screens. Audio is a different story. While audio has been growing in popularity for years in the form of podcasts, audiobooks and simply exploring vast libraries of music, children struggled with gaining the same level of access that allows them to learn, play, imagine new worlds, relax, and even unwind at the end of an exciting day.

Podcasting and audiobooks alone are estimated to become a $100+Bn market by 2027. The children’s segment is the strongest growing category and the English-speaking audience the largest addressable target group by income and consumption behavior. But delivery of audio content for children had been broken for too long. Current options for distribution like CDs or accessing digital content platforms on the parents’ smartphone are not serving core needs.

Yoto is overcoming these challenges with its players as gateway to their inspiring, engaging, and educational audio platform. Aiming to become the category leader for children’s audio, Yoto convinced us with strong traction, a highly engaged community with tremendous product love, a passionate and complementary team of experienced leaders dedicated to deliver a stellar experience, and the best-in-class digital platform designed to serve family needs of fostering independence and creativity. The subscription-like business model based on the initial player sales allows for predictable recurring revenue from content while customer acquisition costs are low through strong word of mouth and referrals.

All these points align with the BPI thesis of supporting founders as they build globally leading consumer platforms that enrich the lives of their customers. We at BPI bring a versatile skillset to the table with regards to scaling platforms, internationalization and localization, product, and brand. In addition, our Burda Group network provides strong expertise in audio licensing and creation, as well as reaching children and their parents at scale.