NZ investors don't get cloud-based model

Online accounting firm Xero has gone from strength to strength, recently announcing Melbourne as its Australian HQ and a NZ$4 million investment for expansion into the US. But the story's not the same here in New Zealand.

Even though the firm's stock "has soared to a record high" it's struggling to get New Zealand's fund managers and analysts to buy into it, says Xero Founder Rod Drury.

"We talk to [the New Zealand investment community] quite a bit, but they haven't invested any money in us. They've yet to understand the cloud-based model," he told the NZX, adding, "We are getting is a lot of broker demand out of Australia where they are now comparing us to Reckon and MYOB."

Xero shares are said to be at their highest since the company listed on the NZX in 2007, but the business isn't forecast to break even until the second half of 2011.

As a result of expansion into Australia, the firm says it expects to create over 50 new jobs in the next five years.

San Francisco-based investor Peter Thiel dropped NZ$4 million to support Xero's expansion into the US market.