Venture is perhaps the most alluring investment class of them all, but also one of the most tricky to get right. It’s a classic case of the investment conundrum – high reward but with high risk. No one, not even Peter Thiel or Bill Gates can get venture investing right all the time. But there are ways of going about it sensibly, says YYX Capital, which offers investment advice to family offices and high net worth individuals, drawing on the experience of a team that has been involved in the creation of seven “unicorns” over the past decade.
London-based YYX Capital, was launched by managing partner and serial entrepreneur James Cox – founder of high tech sleep company Simba – one of the UK’s most successful start-ups.
Michael Jackson, former chairman of Sage and PartyGaming is to join forces with Cox as chairman for YYX Capital, alongside former marketing director of Zoopla from start up to its £1.6bn IPO, Charlotte Harper, hedge fund and family office specialist Julian Barnett and The Garage Soho led by advertising guru Sir John Hegarty.
We don’t charge a management fee, and we only make money if investors make money
Also joining the YYX team is Nicholas Shekerdemain, a successful startup entrepreneur, who earlier this year was the youngest person to be listed in the ‘Social Entrepreneurs’ category of the Forbes’ 30 Under 30 list and is a member of the Peter Thiel fellowship – where Peter pays the leading university students $100k to leave university and build startups.
Focusing on consumer internet, e-commerce, B2B and SaaS (Software-as-a-Service startups, YYX co-invests with clients and offers significant value to investee businesses by leveraging the YYX teams extensive branding and marketing expertise as well as the experience of scaling businesses globally.
As a collective, the partners of YYX Capital are some of the most successful entrepreneurs in the UK, having created seven £1 billion-plus businesses over the last decade. The company moves into their new Knightsbridge office next month – welcoming the companies they invest in to join the workspace so the YYX team can help them navigate the fraught early days of running a company.
What can YYX Capital offer family offices?
YYX Capital plans to invest into early-stage tech companies with their own capital, offering co-investment opportunities to family offices, pursuing all investments with a “skin in the game” approach. “We invest in every transaction we do,” says Cox. “We don’t charge a management fee, and we only make money if investors make money, from realised cash gains – perfectly aligning ourselves with our investors.”
The team at YYX Capital is looking to make early-stage investments in startups in the UK and across Europe. With a strong US network, including Y Combinator and the Thiel Fellowship, YYX Capital will target consumer internet and e-commerce sectors – but will also consider other verticals.
YYX Capital wants to make up to seven early stage, pre-seed and seed investments ranging from £250k to £10 million each year and up to three larger investments of around £25 million annually, ideally growing companies from pre-seed to exit.
Cox says: “Unlike a fund where the managers are incentivized to make larger investments which have led to over-inflated valuations, the YYX team will always seek to invest the optimum amount, large or small and achieve favourable terms for both parties. We are confident that we can outperform the more prominent venture funds by combining a skin in the game approach, with expertise and dynamism. As well as, bestowing access to our ecosystem of influential founders & family offices.”
Another factor that will also interest family offices is YYX Capital’s long-term investment approach
Already YYX Capital has attracted one family office, Cluny Hill Capital, as a co-investor, whose principal, Julian Barnett, says the venture group is targeting an exciting investment niche. “My experience in running a family office has shown me that this area of the market is critically underserved.” Previously, Barnett ran the Paragon fund at Polar Capital and has now joined YYX as Investment Partner.
Another factor that will also interest family offices is YYX Capital’s long-term investment approach. “We are looking at taking a long-term view on these investments,” says Sir John Hegarty. “Sometimes in the UK, there is too much emphasis on the short term when it comes to venture to invest. We are often very, very keen to get to profitability, whereas US investors are looking more to create market share and build up a business over many years. YYX Capital can take those longer horizons when investing.”
This approach will appeal to family offices, many of which have led the move to take a longer-term perspective on investing for a number of years now.
Already this year, YYX Capital has invested in Waldo. They were the first investor leading the pre-seed and seed rounds for the brand which sells high-quality contact lens – direct to consumer, without the hassle or the price tag – straight to your door. YYX Capital has also invested in Airsorted, an Airbnb management company and Monese the challenger bank.
Most recently, YYX has made its first ‘Venture Builder’ investment – acquiring a significant minority in Carbon Theory, the ‘wonder soap’ product. The partnership has enabled Carbon Theory to punch through into the US market and is a testament to the YYX offering to taking great brands and globalize them.
The venture builder is where YYX effectively operates with a co-founder mentality – drawing on their teams expertise and helping shape the companies’ growth from the outset. Cox says ‘the intellectual and operational knowledge our team can offer – from our experiences of doing things right, but more importantly wrong, and avoiding such mistakes, is one of the biggest assets we can give a company”.
To find out more about YYX Capital visit www.yyxcapital.com and or email firstname.lastname@example.org
This is a Partner Content Article in association with YYX Capital