Investing in Yubo, the unique social space for Generation Z

Gaia Capital Partners
Nov 18 · 12 min read
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The Yubo founding team from left to right Arthur Patora (CTO), Jérémie Aouate (CPO), Sacha Lazimi (CEO). Credits to Yubo.

Yubo, the leading platform for young people to socialize online, today announces a $48 million Series C round and counts Gaia Capital Partners as a new investor. The round was led by existing investors Idinvest, Iris Capital, Alven and Sweet Capital. As a part of the round, Jerry Murdock, co-founder of Insight Partners and investor in Twitter, Snapchat, TrueCaller…, will become an independent member of the Yubo board.

Announcing the first consumer investment of Gaia Capital Partners

Founded in 2015, Yubo is a French startup creating a safe social space for young people, inspired by the best of offline interactions and powered by online possibilities. Yubo is quickly transforming the way in which Generation Z connects online. Yubo is a landmark investment for Gaia Capital Partners as it is its third portfolio company (more here about our investment in Aircall) and first investment in a consumer, social media company, and native mobile application.

We are grateful to Sacha Lazimi, Arthur Patora, Jérémie Aouate, co-founders of Yubo, and the rest of the team, for their confidence. Every investment is about discovering a new team, mission, product, industry, vision… The magic of our job is to venture out and partner with entrepreneurs building exceptional companies. Doing so, we first spend hours, days, weeks, months to make this happen and we will ultimately spend years together with the team we are partnering with.

Who is Generation Z?

Yubo is a social consumer application dedicated to Generation Z or Gen Z. So, who is Gen Z? In sociology, Gen Z defines people who are born between 1995 and 2010. They now represent 35% of the population and $143 billion dollars in spending power¹. This generation has grown over massive technology disruptions and consumption shifts over the last two decades.

First, Gen Z ushered the mobile-first era as smartphone penetration slowly took off over the 2010s with the iPhone launch in 2007 by Apple being a tipping point. In 2020, a survey found iPhone ownership among US teenagers is at an all-time-high close to 86%. Second, Gen Z is also the video-first generation. It is worth noting that Internet video in 2016 stood for more than half of the global IP traffic according to Cisco, which expects this share to be close to 70% in 2021. More interestingly, Internet video is being eaten by live streaming video which is expected to represent 13% of the total Internet video in 2021, up from 3% in 2016.

In the meantime, Gen Z showed a growing disaffection for historical social networks to the benefit of 2.0 social networks. To better illustrate this, more than 80% of Facebook users are now over 25. Since 2015, Snapchat has been ranked as the favorite social network of Gen Z, with Instagram as a solid second, recently toppled in popularity by the TikTok rocket in 2020². Google native, iPhone born Gen Z fast-forwarded us in many ways. Investing in Yubo, at the leading edge of social media, has unveiled to our eyes the tectonic shifts happening in this segment.

The first discovery for us happened around the product.

What is Yubo’s product?

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Credits to Yubo.

As growth equity investors, we are backing Yubo today because it stands at a tipping point for becoming a leading social platform. Also, Yubo plays out during a turning point for online socialization in a very special 2020 year. Wrapping up an investment thesis, Yubo is a compelling company due to: (i) its scale with millions of members worldwide; (ii) an international user base as the majority of users located in the US, the UK, and Australia; (iii) a superior monetization with $20 million in revenue expected for 2020; (iv) a 2020-accelerated growth with strong market tailwinds; and (v) an audience to grow with because 80% of users are aged 16 to 21. But Yubo would not be a game-changer company without their unique product. More importantly, we thought the product fitted our thesis of responsible investors (we will get back to this point later).

When the fundraising process started, we onboarded on Yubo and discovered a parallel universe. To walk you through the mobile application, Yubo is a place featuring video live streaming rooms that are open to anyone. There, young people from everywhere can join and interact together, provided that they are below 25 and older than 13 years old. On the platform, users can bind together and host a group live stream.

First, what struck us was a totally new way of interacting with people through live streaming video and how it enabled an immersive experience of online socialization. Second, we discovered the large diversity of rooms and live streamers discussing all sorts of topics, mostly as youngsters having fun online and mingling with their counterparts. The third astonishment has been to see how powerful the product is. On Yubo, you can basically select the countries you are willing to explore and the associated live rooms.

The product discovery is organized around categories of live video rooms. For example, users can join rooms playing icebreaker games such as Pictionary or quizzes, or join international rooms, or LGBQT+ rooms, etc. The most popular configuration on Yubo is four or five people joining the same chat room around video, audio, and text exchanges. Most people who talk there do not know each other in real life, none of them are famous.

Speaking of business models, Yubo is a unique social network monetizing through in-app purchases just like gaming (think of Fortnite). A common saying tells that if you are not paying, then you (or your data) are the product of advertising-based platforms. The company does not sell user’s data or their influence on brands. Users can buy premium features starting at $2 that give them “superpowers’’ in the application. For instance, they can push their chat group to the top of Yubo’s home page for a couple of minutes. A monthly subscription to premium features is worth about $10. Besides the live video room, Yubo has a matching-based social discovery engine to enlarge one’s social graph on the platform.

Building on this innovative product, Yubo defines a new chapter of social networks we wanted to take part in.

How is Yubo reinventing social discovery?

Credits to Yubo.

Yubo took a contrarian approach to online social discovery since inception. Yubo enables you to reach out to people that are not in your offline vicinity but people worldwide who connect online to share a common will to bond with others.

“Yubo is a social network about socializing,” wrote Techcrunch³ about the company. “Facebook, Instagram, Snapchat… everything is fake” related Sacha Lazimi in this article. Building on this, it is fair to say Yubo is all about a search for authenticity through “performative” interaction which is live streaming with other people. Most social media are “constative” or driven by passivity from the users one must say. You end up following the same top accounts with millions of followers on incumbent social networks who are increasingly out of touch with the aspirations of users, namely Gen Z. Sacha elaborates: “It’s a passive experience that involves a lot of scrolling and liking, but very few meaningful interactions. In other words, many teens feel lonely on those social networks³.”

Interviewed with Yubo investor François Méteyer (Alven) in the Venture Stories podcast⁴, Sacha discussed performance-driven platforms. They are based on vanity metrics according to him and are “‘outcome-driven platforms” — think more followers, more fame, more money. Those platforms are also asynchronous, while Yubo is synchronous through live video, and content-centric with social layers on top (Instagram, TikTok, Twitch), while Yubo is people-centric. Conversely to most approaches, the company has built an open space platform where teenagers can express themselves in a safe space. Somewhere they can act freely and be themselves in a dedicated room, free from judgment, and liberated from the constant urge of performance, unlike other platforms. A place where they also are sheltered from potential bad behaviors happening online (we will get back to this later).

Once we were convinced by Yubo’s innovative approach, we found an alignment between Gen Z's aspirations and what the company offers to them.

How is Yubo matching with Gen Z’s aspirations?

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Credits to Yubo.

François Méteyer well puts a description of Generation Z and its aspiration: “Teens are looking for ways to disconnect from the increasing adult pressure, and disconnect in places where they can just be teens, where they can play, where they can socialize without consequences, or I would say with fewer consequences than in the real world; [places] where they can reassert control over their identity⁴”. Those Gen Z traits are authenticity, immediateness, amusement, but also hustler mentality and hacker mindset. Building on this take, recent Gen Z studies reveal that this generation is facing major socio-economic challenges to professionalize. Hence, teenagers are keener to thrive and learn through entertainment to relieve them from constant peer pressure and stressful competition. A new phenomenon is that this peer to peer learning happens more and more online.

“Gen Z is not only about competing, they are about discovering and collaborating. They crave to have authentic, meaningful, and real-time relationships in safe places free from bullying […]. They want to work with each other and build together towards a shared goal.” Social platforms and entertainment platforms are increasingly intertwined and media consumption is converging with social networks. “Gen Z are hungry for social media that let them create, that let them have a voice in what they consume, and somewhat interact online in a more active way when compared with traditional passive social media,” concludes François.

Yubo answers for primary needs for teenagers, which is socialization. Real-life or online socialization is increasingly undifferentiated, and frontiers are blurring. Gen Z encourages and formalizes friendship formation happening online, anchored around shared live experiences. We view Yubo as a great technology platform, thanks to its innovative live streaming features, to help young people socialize online. The positive user’s feedback about the product also proved to us Yubo is on the right track.

To land where they are today, Yubo’s journey has been exhilarating.

A look back at Yubo’s story

Aged 27, Sacha (CEO) and Jérémie (CPO) almost stack 10 years of experience in the social consumer space and in mobile application development. As 18-year-old entrepreneurs, they started by launching Saloon, a geolocalized mobile application helping nearby people to socialize. They quickly gathered 5,000 users before crashing the project. Undaunted by this attempt, the duo later partnered with Arthur Patora (now CTO of Yubo) while in engineering school to launch Twelve, a mobile application to meet one person a day (networking, sport partners, friends, dates…) that reached 30,000 users.

Consumer mobile businesses are hard to develop, social platforms are even harder as they resort to virality, network effect, user-generated content, and ultimately ego engineering. Yubo’s team demonstrated a rare dedication and drive to fulfill its mission of improving the way people connect and socialize online. Imagine running a social media company like Yubo with the mission to ever increase its user base, but also with rampant server costs, and no clear path to monetization … Yubo successfully monetized three years after its foundation, leaving the team with no other option to master their market and perfectly understand their users.

The team did countless product iterations within the application and in the technology infrastructure. Yubo has data-driven DNA and they pilot the business with high scientificity. They showed resilience, product-centricity, frugality, and skills in consumer mobile applications. Yubo is one of the French mobile consumer champions counting Zenly, Lydia, MWM, Voodoo, Mojo, PhotoRoom, and more. France is seen in many respects as one of the leading hubs of the consumer mobile industry nowadays.

Zooming out for a moment, how is Yubo fitting to the Gaia Capital Partners thesis of partnering with sustainable companies?

Who needs another social network? Maybe one safer for youngsters

There is no doubt Yubo is addressing a very sensitive audience. In a recent Sifted article Sacha argues⁵: “The Internet can be a safe place if you use technology for tracing, localization and moderating for good,” […] We are creating a wholesome space, for a generation that was born with a phone in its hands.” Yubo is very clear that it has a responsibility to protect young people and to constantly develop tools and processes so that young people have boundaries and aren’t placing themselves at potential risk.

Yubo has a minimum age limit of 13, strict community guidelines in 16 languages, innovative technical tools, and human moderators to help reduce risk. The users can easily block and report offensive content and Yubo leverages artificial intelligence (AI) and computer vision to flag explicit content or dangerous behavior. Yubo also verifies the real-life identity of users through AI-powered ID checks. Users are segmented by age to avoid a large gap between users. Moreover, the company is very close to its community and works with teens responsibly doing prevention and education campaigns to encourage positive vibes on the platform. Last June, Yubo was ranked the safest online place for nudity detection with kid-focused Lego Life by an independent moderation company⁶, ahead of mainstream social networks.

On the other hand, various scientific studies⁷ ⁸ have shown a correlation between passive use of social media and mental health problems such as anxiety or depressive symptoms. In contrast, active usage may increase social capital from acquaintances or emotional support from close friends and lead to improved well-being. Yubo is all about being active again on social networks through live streaming and one-to-few conversations. Surely teens will continue to flock to social media as a key component of their socialization and their affirmation as young adults. We think Yubo is acting positively to give them the best social media experience and provides peace of mind to their parents.

Once you understand that a more virtuous online space for Gen Z is much needed, it is up for an investor like Gaia Capital Partners to act as a steward to help implement best practices for sustainability within the company. Yubo already initiated numerous important initiatives on the safety and privacy side, by partnering with leading associations for childhood protection and setting a Safety Board with recognized experts. We strive to help them take further actions around ESG such as diversity hiring and energetic sustainability.

With this fundraise, Yubo aims to hire even more people within its safety team and expand it globally. The future holds many more exciting opportunities for the company.

What is lying ahead for Yubo?

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Credits to Yubo.

This Series C round will help the company to develop key pillars around (i) product enrichment and enhanced live streaming capabilities, (ii) team expansion and internationalization, (iii) strategic partnerships, and (iv) increased moderation and safety measures. A Yubo desktop version will be released soon and the company has recently partnered with Snap to add new filters and lenses and give a very unique experience to users.

Today we are thrilled to partner with a major European consumer social company and an independent platform respectful to its users’ data. We are convinced that Yubo is supporting the emergence of new usage in its category that is important to address. We also think it is the most suitable platform and team to execute an ambitious vision.

Congratulations again to the team for this amazing journey and this fundraise!

Sources:

1. Gen Z Trends Report, Zebra IQ (2020).

2. Taking Stocks with Teens (Piper Sandler, Fall 2020) — US teenagers.

3. Yubo is a social network about socializing

4. Building and Investing in Social Entertainment Products For Gen Z with Sacha Lazimi and François Meteyer

5. Who’s Yubo? Europe’s Snapchat for teens has 40m users.

6. Lockdown Nudity Detection Race — The Results!, DragonflAI

7. Kaitlyn Burnell, a psychological sciences doctoral student in the School of Behavioral and Brain Sciences, 2018.

8. César Escobar-Viera & Alli, Passive and Active Social Media Use and Depressive Symptoms Among United States Adults, 2018.

Gaia Voice

Gaia Voice, as its name suggests, echoes the voices of Gaia Capital Partners team members.

Gaia Capital Partners

Written by

Gaia Capital Partners is an entrepreneurial growth equity fund whose ambition is to foster the next generation of European tech titans.

Gaia Voice

Gaia Voice, as its name suggests, echoes the voices of Gaia Capital Partners team members. It’s a place to share our perspectives and analyses and lift the veil on our job as growth investors.

Gaia Capital Partners

Written by

Gaia Capital Partners is an entrepreneurial growth equity fund whose ambition is to foster the next generation of European tech titans.

Gaia Voice

Gaia Voice, as its name suggests, echoes the voices of Gaia Capital Partners team members. It’s a place to share our perspectives and analyses and lift the veil on our job as growth investors.

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