“When families find a solution to a problem, they tell everyone in a similar situation because it’s very likely to be a shared problem,” says Ben Averis, CFO at Yoto. “As a parent, I can put my hand up and say if someone does have clever suggestions to support family life, I’ll tell everyone. And we benefit from that at Yoto. Word of mouth is incredible because it’s a genuine result of a great product and customer experience, leading to a highly engaged community of families that then go on to talk to others about our products. This helps to spread the word in a really organic way and ultimately helps us with our fast, sustainable growth.”
Founded in 2015 in London by Filip Denker and Ben Drury, Yoto is a child-centric interactive audio platform offering screen-free entertainment and education. The company, with a team of over 100 across the UK, North America and France, produces devices operated by physical smart cards for access to audio stories, educational activities, music, podcasts, radio, and sounds. Yoto was inspired by Montessori educational values and focused on promoting independent and creative child-led play. The co-founders, driven by the potential of technology and shared concern over excessive screen time’s impact on development, established Yoto to allow kids to listen, learn, and play at their own pace. Ben Averis later joined as CFO, bringing his expertise from Audley Travel to support Yoto’s growth.
Montessori education centres on child-led, hands-on learning, focusing on independence and freedom within certain boundaries. These principles are deeply integrated into Yoto’s ethos, as Averis elaborates, “A big part of the Yoto proposition is the idea of putting kids in control, but in a safe screen and ad-free environment, which are issues that all modern families are faced with pretty early in their children’s lives. Cofounder Ben always stresses that the Montessori principle of kids in control was the first thing that they developed the product for, which is why the player itself is very simply designed and easy for children to navigate.”
The business has benefited from word of mouth and support from a loyal community. Averis credits this to the product’s ability to solve a real problem for parents: keeping their children engaged in a meaningful way. “From the beginning, we’ve seen the magic of families buying a Yoto, falling in love with it and telling their friends about it. This word of mouth is hugely important to us, and it’s why our Yoto families are always at the heart of everything we do.
Although the company has scaled significantly, it has not been without hurdles. Averis pinpoints challenges associated with managing a physical product, particularly given overseas manufacturing constraints. “When you grow as fast as we have and you’re selling a physical product, you have to stay focussed on actually getting that product into the hands of your customers. COVID was not good for supply chains. So a big headwind was supply challenges, whether those were factories that were operating at half capacity because they were under COVID restrictions or there was a shortage of freight options. We had to fight to solve those.”
Initially, Yoto relied on equity investment to finance inventory. Now, however, it has multiple offers for high-quality debt, enabling the company to plan its next growth phase. “Because of our success, we now are working with notable banks who offer high quality and economical lending, but that didn’t exist a couple of months ago. It was harder to have those conversations when we were not big enough. Now, we’ve grown fast and we’re hitting our numbers and that has opened all these doors to great working capital funding,” says Averis.
Yoto faces the challenge of seasonality, as over half of its business comes in the run-up to Christmas. To counter this, the company is focusing on content, which remains in demand throughout the year. With its subscription membership, Yoto Club, now boasting 40,000 subscribers, the company is also investing in original IP. Yoto’s BrainBots series, featuring robot characters on educational quests, is a top seller and has enabled the company to develop partnerships with the likes of Merlin Entertainments to co-create content using the IP.
Averis explains developing IP fits with Yoto’s mission: “Yoto is a trusted brand. We curate highquality content that children love. And we plan to continue to double down investing in our own IP, making that a real focus of what Yoto is all about.”