Why JKR is taking a ‘partnership first’ approach to its investments
Alexander Gusev and Nikola Teofilovic exclusively for SBC News
Alexander Gusev and Nikola Teofilovic exclusively for SBC News
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JKR Investment Group has already established itself as a key partner for international companies including BETER and Betegy that provide B2B solutions to the world’s biggest sportsbooks.
But for both Alexander Gusev, the company’s CEO and Nikola Teofilovic, JKR’s Senior Investment Manager, the key to its success can largely be attributed to strong partnerships, industry expertise and a customer-first approach.
SBC: So Nikola, you joined JKR back in April as the new Senior Investment Manager. Can you tell us a little bit about your background and how you came to join JKR?
NT: As you know, I joined Catena Media in September in 2016 where I took responsibility for AskGamblers which we acquired in April of that year. When I first started, AskGamblers had a team of less than 30 people – and the team has done an amazing job in scaling the AskGamblers division. I was then promoted to Executive Management, my title was Vice President for AskGamblers.
I actually had a lot of offers over the last two years – I was incredibly happy at Catena Media and never really took any conversations further. Then JKR reached out to me and I saw it as the next step in my career to move to the investment side of things.
I really like people at JKR. I visited their offices several times and really got to know the partners and the JKR team. I think the predispositions were there, I was given the mandate to make a difference – I guess the timing was perfect really. So I left my job at Catena Media on 31st of March 2021, and since then a lot of things have changed!
SBC: How will the experience with your previous employer help inform your investments in your new role?
NT: I think over the last few years I’ve gathered a lot of experience when it comes to scaling a business organically. The team was really successful within AskGamblers, also, Catena Media did more than 40 acquisitions. From that, I’ve gained a lot of knowledge about successful acquisitions – as well as knowledge about not so good ones. That understanding is something that I’m bringing to JKR which I believe can make a difference.
I’ve seen a lot during my time in the entertainment industry. Since Catena Media is the largest igaming affiliate alongside Better Collective, I’ve also been following other companies and their M&A activities. I do think that this is my strong suit. I’m very operational and active in management.
I do have a background in finance, and so being on the executive management team at Catena Media has helped me to gather a lot of important experience and knowledge – not just from the affiliate industry but also from the operator side too.
SBC: Taking a closer look at the M&A side of things, what are your expectations for how this moves on for igaming, esports and even sports data; Do you think the current wave of M&A activity is here to stay?
NT: So what I actually think we’re going to see in the next few years is consolidation. I think that this is already happening as we have seen with companies such as Evolution which has been quite aggressive on the gaming provider side. But also, M&A activity on the affiliation side is also increasing. Then there is the operator side – for example, the Entain and Enlabs deal. There is also a lot of SPAC activity in the US market.
Usually, when an industry has been really immature and then matures, we begin to see a consolidation phase. I think we’ll probably end up with even larger players in the market with even bigger market shares.
SBC: You’ve mentioned investing in companies you believe can scale; what are the other key factors helping you determine which companies to partner with?
NT: I personally have been investing for more than 20 years. What I have learned is to invest in people. From my perspective, a business has to be viable and have potential for growth, but the important factor is the team – who is going to be executing the business’ vision?
JKR does have some checkboxes – at the moment we are focused on B2B companies in the entertainment industry. But otherwise, it’s all about investing in the right people that will make that overall idea or dream come true.
AG: When we talk about partnerships, we first and foremost have to find common values. Only then can we partner with a company. A person or company can join us if they are in line with our values at JKR.
For me, trust is very important. I can divide trust into three aspects. Firstly, I can trust someone as an expert in their field; the second is that I can trust someone as a partner or as someone who can take care of a project. The final element is that I can trust someone never to deceive our company.
Any partner must also have a fire inside – it is the motivation for growth to move our companies further. Similar to the first law of thermodynamics, heat is a form of energy and can be used to fuel growth. This principle can be applied to nearly all businesses!
SBC: Okay, so we’ve spoken about what it is you look for when partnering with a company. But in your opinion, what would you say is JKR’s USP – why do companies want to partner with you?
AG: First of all, we have a wide network of people from all over the world – each of whom have different perspectives in various fields. Whether one needs to attract capital, sell their product, or acquire some expertise, they can reach out to us and we will help fill the gap using our network.
Among our partners, we have accumulated a wealth of experience. I don’t necessarily just mean hard skills or expertise – but also philosophy. It is not easy to acquire this sort of knowledge. All of our company laws and our key lessons come from our previous experience. Like everyone, we have made many mistakes before, however we have managed to convert these mistakes into life-long lessons.
NT: I believe a lot of companies want to partner with us because we have industry knowledge and experience – but also have a really strong drive. As I said, we call ourselves entrepreneurial investors. We haven’t lost that drive, hunger or happiness to succeed. We do everything in our power to succeed.
We pick up the phones, we make calls, we do whatever it takes to support our investees and help them grow. Money is an important factor, but from my previous investments experience, there needs to be that hunger and drive to succeed. At the end of the day, that drive helps the dream of our portfolio companies come true.
SBC: While JKR is still a relatively young investment group, you’ve managed to build and secure partnerships with the companies that are now known and secure partnerships and locked a number of blue-chip clients. How do you feel about it?
NT: For me as one who just recently joined JKR, it’s a privilege to work with companies like these – it feels great that we have achieved such success in a relatively short period of time.
It’s great that we have some great international investments, those that have already gained so much traction. At JKR, we always have a global perspective when it comes to our portfolio. So whatever partnerships we undertake, we always have the goal to scale globally.
AG: I’d like to follow on from that by describing our international investments as two arms. One arm is focused on strategic management, as is the case with our BETER investment. We have built this company from scratch.
In the case of Betegy, this company has been built by an external team and we made an investment. This is our second arm. I believe that these two arms reinforce one another – we are people who can build a business, and we can also use our own money to grow a business even further.
We use our investment knowledge to grow BETER. We also know how to build a company, so we have used this experience to enhance Betegy. It’s like a reinforcing circle. Sometimes you can encounter people who are either an investor or a venture builder, and more often they do not understand one another. But at JKR, we’re different and knowledgeable.
SBC: Nikola, you mentioned taking a global approach to your investments. When looking at the entertainment industry on a global level, where do you feel that deeper investment is required – (R&D, customer service, compliance, data etc)?
NT: I would say that there are a lot of niche investments that are needed across the industry – for example, you mentioned customer support and compliance. However, the areas which I see will need major investments are data and R&D – for instance, AI for optimisation processes.
There is so much data out there – but there is still a big opportunity to filter the right data and use that for real wins. It’s not just about using data for reporting. Data can be used to increase ROI in order to increase your overall margins – that’s when you really get a win out of data. So yes, I’d say those two fields will attract the most investments in the future.
AG: For me, I believe there needs to be more investment in customers. At JKR, we have a motto: first we build relationships, then we build companies. This philosophy is central to our business because so many companies are so concerned about their product, their marketing. But they often forget about their customers.
If you have a strong relationship with your customers and with your partners, your company will continue to grow – making a much more sustainable business model.
SBC: The entertainment industry technologies have become targets for SPAC (especially with regards to the US market) – is this a point of concern for JKR and traditional investors?
NT: SPACs are just venture capitals in public markets. So a SPAC is basically a vehicle for a company to raise a substantial amount of new capital and deploy that towards the business’ purpose. For me, SPACs are just one alternative among many other investment types. I think they act as a compliment more than anything else.
AG: I definitely believe that SPACs present a new opportunity. We all know the benefits and risks associated with SPACs – companies need to weigh up the reasons as to whether this is the way they want to go public or not.
I’m interested in the opinions of people who view them as a point of concern. From my view, when you attract a sponsor to a SPAC, you not only attract new capital but you also attract great expertise. You need to find that expertise somehow, and maybe a SPAC is a good way to do this.
SBC: And a final question for both Alexander and Nikola. What would you both say are the core principles that make up JKR’s investment philosophy?
NT: I’d definitely say that for us, one of our key philosophies is to invest in companies that we understand. I’d also say that we choose to invest in companies which we believe we can scale – not only through capital injection, but also through our own industry knowledge, experience and network.
We consider ourselves to be an entrepreneurial investor that is very active – an investor that will not only contribute with money, but will also speak smart money too.
AG: There are three areas which I would like to outline: partnership, ecosystems and care. Looking at partnerships, there are several ways to build a business. Put simply, you can take the ‘dictatorship approach’ – this is when a CEO implements a very strong, strict hierarchical structure. Or you can grow your business through partnerships.
When you take the partnership approach, you can help people who are already willing to support you – it’s mutually beneficial. So when people join a partnership, they have enough motivation to drive the company’s growth even further.
Motivation is an energy within the company – and so forming a partnership will help you to use that energy to fuel your growth. If something, for example, was to happen to one of your partners, it’s much easier to sustain your business if you have support from a range of others.
Regarding ecosystems, all of the companies within the JKR portfolio collaborate with each other and – in a sense – reinforce each other too. We only add companies to our portfolio if we believe that they will create an added value to our own ecosystem, or if we think we can add value to that company. And, as nature has shown, ecosystems are more durable and self-developing – they don’t need someone to oversee their growth.
Source: SBC News