French social media app Yubo has raised an impressive €11.2 million in capital to continue its international development as a social app for teenagers and young people. Led by Iris Capital and Idinvest Partners, the incoming investors join the likes of Alven, Sweet Capital (created by the founders of the popular game Candy Crush) and Village Global (a network backed by top-flight entrepreneurs like Mark Zuckerberg and Jeff Bezos) in supporting the Paris-based platform. Yubo has already attracted 25 million users around the world, and tens of thousands of new users sign up to the platform daily.
It’s easy to see why. Yubo stands out compared to industry giants like Facebook, Instagram and YouTube, because the French company isn’t focused on the traditional metrics—likes or followers—which have garnered increasing scrutiny. Instead, the social media app is designed to help foster friendships between young people under 25. As such, the company is a rare advocate in the social media sphere for forging genuine human connections online while safely navigating the pitfalls of the Internet.
Balancing freedom of speech and safety
To achieve this, Yubo has had to approach user guidelines and policies with the utmost seriousness, even going as far as to develop algorithms designed to detect when teen users are less-than-appropriately dressed. So far, the algorithms achieve an impressive 95% accuracy. Chat sessions are recorded every ten seconds, allowing the app to respond to violations almost immediately.
According to Yubo safety advisor Annie Mullins OBE, this instant reaction is part of a more creative—and more effective—way of following through on Yubo’s commitment to prohibiting nudity and inappropriate behaviour on its platform. “We want to educate young people, not punish them”, Mullins explained. “People don’t read terms of service or community rules, so having a live intervention in the middle of chatting and communicating with others is an innovative approach […] we set limits and make users accountable for their behaviour”.
Yubo is also determined to “age-gate” its growing online community, separating the under-eighteens from the eighteen-and-over users. Children under the age of thirteen are routinely weeded out from the platform; in the first few months after launching, Yubo removed some 20,000 age-inappropriate profiles using the Yoti verification system.
It was this commitment to creating “an [online] space characterised by great freedom of speech, while also watching over its users’ safety” which convinced investors like Nicolas Debock from Idinvest Partners to participate in Yubo’s recent successful funding round. The influx of cash, however, isn’t just good news for Yubo: it has highlighted a growing trend of innovative European companies garnering the international investment they need to scale up.
A rising tide of investment in cutting-edge European firms
This year has seen a veritable flood of funding into Europe—one partner at venture capital fund Accel has dubbed it the “golden age” for the continent—even as investment into other regions’ startups has stagnated. In 2019, European tech startups attracted a record $34 billion in funding, a whopping 40% increase on last year. And the uptick isn’t just a result of European investors deciding to focus on their home turf, either: nine out of ten rounds over $100 million included at least one American or Chinese investor.
This figure packs an even bigger punch when compared to US venture capital performance in the same period. An assessment of venture capital returns over a 25-year timeline shows US returns performing much higher than their European counterparts; reduce this view to the last five-years, however, and European investment outcomes are coming out on top.
The Continent pulling ahead in fintech
Indeed, innovative European firms are now outperforming traditional powerhouses like Asia and the US in a number of areas, including fintech. If you ask Nikolay Storonsky, founder of Revolut— one of Europe’s most successful neobanks— this isn’t a statistical accident.
“What kinds of lessons can US companies learn from European fintechs? To be honest, I think we are more advanced,” Storonsky claimed at a recent conference in London. “We are three/four years more advanced compared to US companies in terms of product, in terms of regulation, in terms of size. US companies should learn from Europe.”
Storonsky’s confidence certainly doesn’t appear misplaced: Revolut has enjoyed skyrocketing growth this year, from 1.5 million customers in 2018 to 6 million today. Its last fundraising round valued the company at $1.7 billion, positioning the neobank as one of Europe’s top fintech unicorns.
It might already be too late for American companies to claw back this market share. Thanks to the financial and technical muscle already developed by European fintech players in recent years, it is European firms who are looking to launch stateside—while their existing counterparts in the US have struggled to turn customer growth into actual profits.
Crossing the other way over the Atlantic are American investors, and they are arriving in droves. Of the record $34 billion raised by European firms this year, close to one-third of the cash will come from the US, with Silicon Valley financiers in particular looking to get a slice of Europe’s ever-growing pie.
“The question used to be, can Europe generate a $1 billion outcome, and then you had Spotify and Adyen creating tens of billions of market cap,” remarked venture capitalist Philippe Botteri. “Now the question is, can Europe generate a $100 billion company? And my answer is, just give it a few years.”
If the successful funding round Yubo just concluded is any indication, the sun is already rising on European tech’s golden era.