21 February 2024
As featured in Caffeine Daily, written by Fiona Rotherham
In a world where serial female entrepreneurs are rare, Cecilia Robinson has garnered plenty of attention in New Zealand, including around her and her co-founders’ exit from listed My Food Bag (MFB).
The co-founder of Au Pair Link, MFB and Tend Health has won a number of plaudits including the Supreme Woman of Influence in the New Zealand Women of Influence awards in 2017, NEXT Businesswoman of the year in 2014 and EY Young Entrepreneur of the Year in 2013.
But it hasn’t all been plain sailing. Robinson was co-founder in MFB with her husband James, businesswoman and investor Theresa Gattung, and celebrity chef Nadia Lim and her husband Carlos Bagrie.
They’ve copped flak that the listed food delivery company’s 2021 initial public offer (IPO) was fundamentally overpriced, and some brokers and investors were critical of the large number of shares being sold by exiting shareholders.
MFB was then valued at $449 million and is now valued at under $36 million at the time of writing (more on this later). The husband and wife duo’s first venture was Au Pair Link, New Zealand’s largest au pair agency, which they set up in 2007.
Robinson says they started considering an exit after about three years. However, it wasn’t until they had already co-founded MFB in late 2012 that they actively pursued a sale.
The Robinsons have three children themselves and she says the childcare industry does well in good times and bad, because in good times people want childcare in order to have more of a lifestyle balance and in bad times they need it in order to work more.
“It’s actually a really interesting category to be in but at the same time we didn’t see ourselves doing it for the next 20 to 30 years of our life, so we started looking at what our options were.”
A potential sale to a German partner didn’t pan out and the Robinsons appointed a business advisor to run a tender process for the in-home childcare company in 2014.
At the time they were based in Australia setting up MFB there, had one young son and Robinson was five months pregnant.
“It was just an insane period for us. We’d put out this document for people to tender on the business and to provide us with an offer and we had our stillborn daughter that week. It was a very intense period professionally and personally.”
While there were no offers from the tender, a new buyer, Evolve Education Group, emerged shortly after and bought the business for an undisclosed sum in late 2014 on the eve of Evolve listing on the NZX and ASX.
Unusually for a founder-led company, the Robinsons were able to walk away without any further involvement. She says that was because they were able to demonstrate that the business was being largely run by a general manager they had already appointed.
Having such a clean exit was hugely beneficial, says Robinson.
“Even if you love this business that you’ve built, you've handed it over and you don’t have that accountability any more, it’s not your decision making. While it was hard to say goodbye to our team, which was a good team, it was the right thing to do.”
The next exit
MFB grew quickly with a first-mover advantage in what was then a fledgling industry. The Robinsons had put in $60,000 of their own capital and the whole founder group invested a total of just $250,000.
“From that we created a business that when we left as CEOs [in 2018] was turning over close to $160 million worth of revenue and doing 10 percent EBIT on that,” says Robinson.
Within four years the co-founders had sold a near 70 percent stake to private equity firm Waterman Capital.
When asked why they went for private equity (PE) so early, Robinson replied “naivete and poor advice. If I could do things differently, I probably would.”
Having gone through that experience, she says, the company’s founders are now a lot more savvy. “I don’t think we ourselves fully appreciated the attributes and how successful MFB had been in such a short period of time and we were given really poor advice as part of our process as well.”
Robinson says they had an approach from a would-be investor just six weeks after the business launched.
“You’re the person everyone wants to date and at the end of the day you feel almost pressured to run a process because you’re almost constantly being inundated with requests to form a partnership or to buy a stake. When we ran the process it was genuinely because we’d had so much reverse interest that it would have been foolish to not even consider it, but I think we could have run a better process.”
Robinson says around that time they had turned down an offer from an overseas investor for around twice the price Waterman paid because they didn’t want to sell a New Zealand business to an overseas PE firm.
“It was the right decision at the time because we didn’t want to sell a loved New Zealand brand to one of the big US or Asian PE firms, but we should have reflected on that journey a bit more and what the right thing was for the long term.”
She advises other founders being courted by investors to consider whether they have good alignment on the startup’s vision and values.
“We should have done better due diligence,” she says.
The IPO
After the November 2016 transaction with Waterman Capital, Robinson says she and her husband gave themselves 12 months to continue as co-CEOs to see if it would work out. “We resigned 12 months later to the day and saw out an orderly transition to appoint a new CEO. It’s clear that it didn’t work for us.” Robinson remained a director until shortly before the listing.
Any questions about the pricing of the IPO at $1.85 per share (with shares now trading at around 15 cents at time of writing) should be posed to Waterman Capital, she says.
“They’re the people that made the decisions around that. It was a drag and tag process.”
Drag-along and tag-along rights allow a majority shareholder to force minority shareholders to consent to the sale of a company to stop them holding up a promising deal. But the rights also ensure the minority shareholders sell on the same terms and conditions as majority shareholders.
Most of the $342 million raised at IPO went to existing shareholders with just $55 million going to the company in new capital; $38.2 million repaid bank debt and $16.7 million funded the IPO costs. Waterman Capital sold down its stake from 70 percent to 15 per cent.
To put it bluntly, a group of men listed MFB and the women who were the founders of the brand, copped criticism for it, says Robinson.
“I wonder if the founding group hadn’t been female, I wonder if the same approach would have been had. There are lots of examples of other businesses that have listed, not necessarily on the NZX, with male founders that haven’t received the same kind of targeted abuse or criticism.”
Waterman Capital didn’t respond to Caffeine’s request for comment.
Robinson rejoined the MFB board in mid-2022, hopeful her institutional knowledge would help boost the business’ performance.
Returning to MFB has been a positive experience, says Robinson, and she holds the new CEO Mark Winter in high regard. His vision is closely aligned with the company’s original objectives and focus, she says.
In the IPO, the Robinsons’ stake dropped from 11.8 percent to 3 percent. They increased it again to close to 8 percent at the end of last year “as testament to my belief in its potential and direction”, says Robinson.
“Serving again as a director, I am committed to showcasing this belief to our stakeholders. Moreover, during the past year, my confidence in Mark’s leadership as CEO, along with the dedication and expertise of the wider leadership team, has only strengthened,” she says.
Retirement? Hell, no
The plan for the husband-and-wife duo was to retire after MFB. Robinson recalls soon after sitting opposite James in their home office and posing the question of whether they should do “this health idea” they had been talking about.
“He was like ‘just give me a break before we even consider something like that’.”
The break involved doing largely charitable activities but Robinson was itching to get back into the startup world where she could utilise her skills as well as her money.
“I’m really rubbish at tennis – I tried to pick up tennis and go for coffees and it didn’t really suit me as a person. I don’t even drink coffee.”
In 2019, prior to the Covid pandemic, the pair, along with Dr Mataroria Lyndon and Josh Robb, started work on primary healthcare provider and technology company Tend Health. It allows patients to make appointments and have online video consultations with doctors and nurses through the Tend app.
Backers include Gattung and former Infratil CEO Mark Bogoievski (the latter got involved when Tend did a $15 million closed capital round in January 2021).
The experience and lessons from their past endeavours have been crucial in shaping the philosophy behind Tend, says Robinson.
The board is not only capable and supportive but also shares their vision – a dynamic Robinson says is vital for any founder.
“Their advice challenges us constructively, fostering a relationship based on respect and mutual growth.”
This time around it is a startup with a purpose: to make a tangible difference to New Zealand’s health system.
“We are building what we want to be a 100-year-old Kiwi-owned healthcare business. We’re not looking to sell this business to a big overseas party. That’s intentional language that we use with our team and our board to be very clear about what we are building. It is a legacy.”
The Robinsons are the largest shareholders in Tend with a near 49 percent stake and she says it is always different when your own money is at stake.
“It was easy for many years just to raise capital and deploy it but when you’re dealing with your own funds – and we’ve always done that – every cent matters, every dollar matters. You work really hard to deploy in a way that makes sense and is going to get the best return from a healthcare outcome.”
The Robinsons have no exit plan for Tend, despite swearing after the sale of their early childhood company that they wouldn’t have anything to do with government funding in future businesses.
Robinson says she wants to spend the rest of her working life with Tend where she says both her and James’ skill sets and experiences are well applied.
“It is unusual to do what we have done – three very different categories – and it would have been far easier to go and set up another food business after MFB, because we had all the relationships, but it wasn’t what we wanted to do for the rest of our life. We have found our calling.”