The Value Question – Why From Babies With Love Sees Deprived Children As Its Shareholders by Forbes – Entrepreneurs

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Cecilia Crossley says her shareholders are children in need of help

Source – Pexels/Juan Pablo Arenas

The Anglo-Saxon model of capitalism tends to place the highest possible premium on shareholder value. If a company is delivering for the shareholders, the CEO can look forward to a generous payout and more or less everyone is happy.   

Cecilia Crossley wouldn’t necessarily disagree with the idea that shareholder value is a crucially important metric. Indeed, the mission of her company – From Babies With Love – is to channel as much money as possible to its shareholder base.

But here’s the difference. As Crossley explains: “Our shareholders are the children that we help. They just don’t know they are shareholders.”

Although brought up in the leafy English county of Hertfordshire, Crossley is half Brazilian and spent a lot of time in Rio, on holidays, when she was growing up. “I saw a lot of children on the street in Rio – that gave me a degree of awareness about child poverty,” she says.

Back in Britain, Crossley studied economics at University and went on to work as an auditor at KPMG, where she became involved with the firm’s corporate social responsibility (CSR) initiatives. It was the beginning of a journey that would see her taking an internal auditing job at the development charity, VSO and ultimately founding her own social purpose company.

Unknowing Shareholders

The idea behind From Babies With Love is a simple one. The company sells a range of baby gifts – including clothes – both to consumers and to corporate customers and all profits are funneled to initiatives that support deprived children – the unknowing shareholders – around the world.

Starting life as a laptop-enabled kitchen-table venture – albeit one with a team of unpaid non-executive directors on hand to give advice – the company now has five employees working in dedicated office space. In the financial year to the end of April 2019, profits are set to come in at £50,000 and, to date, £100,000 has been raised for the children it supports. 4,000 children have been helped. In terms of profile, For Babies With Love is a finalist in the upcoming Veuve Cliquot Business Woman awards.

So when I spoke to Crossley, I was keen to ask how she had squared the circle of creating a company that combines a clearly defined social mission with a commercial operation that is designed to maximize the value for its beneficiaries. Equally important, given that From Babies With Love needs capital to expand, is there anything in the model that will attract investors?

The Market

Perhaps surprisingly, the fastest growing side of the From Babies With Love is the business-to-business operation. As Crossley explains, the consumer side of the baby gift market is crowded and competitive. The company has a unique selling point in that – from the consumer’s point of view – the joy of buying a gift is matched by the satisfaction of knowing that other, unknown, children will benefit. Even so, consumers can choose from a multitude of retailers serving the children’s market.

A Different Beast

The business to business market is a different beast. The company supplies products to businesses that want to send gifts to, say, members of staff who are about to go off on maternity leave. Crossley says the offer ties in neatly with a much bigger trend towards businesses going the extra mile to attract and retain women in the workforce. “And this is a part of the market where we really have no competition,” she says.

Low Risk

The business was launched with £5,000 to buy stock. “It was a low risk, low capital approach,” says Crossley.

And that tactic has continued.  So far, From Babies With Love has managed to grow without investment, not least because it has agreed payment terms with a key supplier. Effectively, goods are not paid for until they have been sold on to customers. Crossley acknowledges, however, that it took time to build trust. “When we started we had some credit – thirty days to pay – but once the relationship developed we felt we could suggest a change in the terms.

Raising Capital

There are challenges ahead. From Babies With Love is structured as two entities – namely the business itself and a foundation which receives the profits and channels them to the “shareholders.”

The aim now is to raise capital and Crossley is looking at the options. “We have to look at how investors can get a return, without them taking equity. We look at loan finance. And we can look at some kind of revenue participation, with a return going to the investor from the top line.”  From the perspective of her accountancy background, Crossley hopes that the two-tier structure – business, foundation – will help facilitate that fundraising.

Social impact businesses are increasingly looking at models that allow them to scale up and maximize the benefits they offer. To that end, many operate as fully commercial companies that offer a return to shareholders while keeping a social mission at the core of what they do. Others – such as From Babies With Love – operate commercially but with a more restrictive structure. But Crossley believes there are investment models that will facilitate growth.

 

April 29, 2019 at 05:02AM
https://www.forbes.com/sites/trevorclawson/2019/04/29/the-value-question-why-from-babies-with-love-sees-deprived-children-as-its-shareholders/
Forbes – Entrepreneurs
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