Yolo Investments 2024 in review

...but more importantly, where we are making our bets in 2025!

Dear Partners & Friends,

We are delighted to share our latest Yolo Investments annual letter.

I founded Yolo Investments on a simple belief, that backing outstanding people is the best way to make a positive impact in this world, but more importantly creating a trusted network of these people to create efficiencies in commerce.

Early on, I learned that success is built upon great relationships. Investing is an extension of this idea.

Yolo Investments evolved out of an opportunity to support fantastic entrepreneurs and businesses with capital and the network of knowledge and connections we have built over the years.

Markets will ebb and flow, and trends will change, but these relationships we continue to build will always be our edge.

Let’s have a fantastic 2025.

Tim Heath, GP

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Overview

Against a backdrop of stagnating venture capital investment and ongoing economic and geopolitical uncertainties, we continue to focus on sectors that showcase resilience and growth, even as market multiples compress.

Amidst historically low venture capital activity, signs of recovery are beginning to emerge. Seizing this opportunity, in January this year, we launched Fund II, a €100 million fund targeting gaming, fintech, and crypto.

Despite facing one of the most challenging fundraising environments in recent years, we are proud to announce that Fund II is over 90% committed, and we expect to have the final closing in Q1 2025.

Built on seven years of validated strategy, this fund marks our first step in opening investment opportunities to select external strategic partners. We have successfully onboarded a significant number of LPs and could not be more proud of the incredible clientele in our fund, comprising sector heavyweights and visionary leaders.

Through hosting exclusive dinners and events, facilitating high-value discussions, sharing valuable industry insights, exploring new investment opportunities, and creating a safe and trusted environment, one of our primary objectives in opening the fund to outside investors is to build a community of like-minded industry leaders, where collaboration and shared expertise benefit all parties involved.

By bringing together the best minds in the business, we can create opportunities that drive collective growth and success for the Fund and the ecosystem.

Licensed and regulated in Guernsey, Fund II is off to a flying start. We’ve made seven investments within the first year of operation and we are focused on actively deploying more capital from the fund in the following years.

Our investments fall into two broad categories - gaming and fintech (in which we include crypto) - and we’d like to share some thoughts on our outlook for 2025 and beyond.

Gaming

The operator model remains one of the most compelling opportunities in iGaming, with unmatched potential for disruption and the ability to generate exponential returns. We would like to highlight some of the more interesting innovations we would welcome in the next generation of operators.

These are the five themes we believe will drive outsized returns in the years ahead:

1. Embedded iGaming
   Embedded iGaming meets players where they are, seamlessly integrating gambling into platforms with established user bases. We have already seen early examples of this with Robinhood’s prediction markets, engaging its 25 million funded accounts, and @Whale’s native integration into Telegram. By removing friction and being present where players spend their time, these operators unlock new channels for growth.

2. Hybrid Gaming
   The lines between gaming and gambling are beginning to blur. We are seeing early steps toward a future where gambling products adopt the storytelling, mechanics, and engagement of AAA gaming experiences. This convergence elevates the product offering and creates owned, IP-driven content that stands out in a crowded marketplace.
   

3. Alternative Products
   Alternative products rethink what the core gaming experience can be. Prediction markets, for example, gained mainstream attention during the last U.S. election, combining betting mechanics with the utility of “useful speculation.” On-chain gaming protocols are also emerging, bringing traditional betting products fully on-chain. While still in the early stages, these products have the potential to expand the market and redefine the boundaries of iGaming.
   

4. The One-Stop Shop
   A one-stop shop creates a unified ecosystem, much like WeChat has done outside gaming. DraftKings and FanDuel are well-positioned to lead this transformation, leveraging their large customer bases to integrate high-margin, entertainment-focused products. The opportunity is clear—in Illinois, for example, parlays now account for 60% of Gross Gaming Revenue, far outpacing traditional sports betting categories.
   

5. Uniqueness
   In an industry defined by sameness, differentiation is critical. Operators can stand out through product innovation or acquisition. Dabble, for example, blends social features into its betting platform, driving retention nearly twice that of traditional sportsbooks. On the other hand, Forever Network has built a highly engaged sports community, giving it a unique foundation to launch its product.

Evert & Klen have elaborated on each of these themes in an article on next.io

Fintech

As broad a term as fintech can be, from the outset, we have focused on its key driver: moving money.

This is the space we’re most familiar with as a client ourselves, and we find that the solutions to our own problems often have broader implementations.

Crypto started from the same basic need, and more than a decade later, the main utility is still in the same financial space. Thus, it makes sense to view crypto and fintech together. They often complement each other, with crypto making it easier to move money on the backend, while modern fintechs offer innovative user experiences and highlight the areas we can disrupt.

1. Embedded Finance
As with gaming, the same applies to payments, investments and moving money: bring it to where the users are. For instance, insurance can be integrated directly into e-commerce, or payments can be made through messaging apps. In the future, we’ll be able to connect our money to apps we use and execute the transaction directly within them. We are closely watching those who are building this type of infrastructure.

2. Infrastructure Providers
With more fintechs, wallets, exchanges and payment providers launching, getting your product to market swiftly has never been more important. No one can build everything themselves, so pick-and-shovel providers, like DFNS, become extremely interesting propositions.

3. Connecting crypto and fiat
Offering only one or the other is not enough in 2025. Every wallet, exchange and fintech is looking for ways to adopt both, with non-custodial wallets connected to debit cards or wallets which can receive euros and dollars as easily as Bitcoin, Ethereum or Solana tokens. This is about seamless conversions in both directors, both locally and globally. It’s the functionality we want as investors, business owners and consumers. We’re seeing crypto companies adopt banking features faster than the reverse, and we envisage this being a driver of disruption over the coming years.

4. Assets get tokenised
Stablecoins have successfully tokenised fiat currencies. We see this trend expanding into other financial products, particularly stocks, bonds, ETFs and loans. Bringing this on-chain is a huge win for all involved. It’s increased utility for blockchains, and an increased user base for TradFi. We see a future of instant, global access and 24/7 trading, providing more accurate, real-time pricing.

5. Account abstraction
In short, this is about making crypto easier for everyday people. The crypto experience is still too complex for many people. Seed phrases, gas fees and working out which network you need to be on are not things the majority of people want to navigate. You can’t imagine them doing it in any other field. Crypto needs to abstract this away to onboard the next tranche of users, and it is rapidly making progress. Companies that master this will disrupt and generate tremendous value.

6. Regulations and compliance
Crypto regulation is already here, and more are coming. Compliance tech across crypto and fintech will help automate essential processes, reduce costs and make it easier to navigate the bureaucracy. It’s a complex space, and reliance on this tech will only increase.

7. DeFi via CeFi
We’re very excited about the brave new world decentralised finance is creating. But it’s complex and not for everyone, at least for now. Centralised finance still has an important role here, particularly in providing the UI layer to simplify things and ensure compliance while tapping into the security, innovation and liquidity DeFi delivers.

Looking ahead

One of our latest investments, Mesh Connect, is an excellent example of a company that touches many of the trends we’ve just outlined. Mesh securely enables safer and easier crypto deposits, payments and on-ramping, allowing users to connect and interact with hundreds of wallets and exchanges. It does so while reducing complexity via a modern UI that users are familiar with.

This is just one example of us finding companies that align with our vision and thesis that will benefit from the ecosystem we’ve developed. There will be many more such examples over the coming year.

In a year rightly marked by AI hype, this might be one of the few writings that's not all about AI. We're committed to a customer-centric investment strategy. While AI is a powerful tool, we believe its true value lies in its application to solve real-world problems. We focus on investing in companies that deliver tangible benefits to their customers; if the underlying technology is AI-powered, that's good, but that alone is no longer sufficient, especially for the next generation of unicorns.

Our Retrospective

2024 has been one of growth and valuable lessons for Yolo Investments. From launching our very first LP/GP fund to strengthening deal flow access to effectively planning how best to deploy capital over the term of the fund.

We’ve enjoyed incredible success so far on this journey. Companies across our portfolio - which has grown to more than 600 million euros AuM - are thriving.

But most excitingly, we are now positioned to take an even more significant step in 2025.

We’re honoured to have your support along the way.

Yolo Investments Team

yolo.io