Xero raises NZ$180m for global growth

Xero has raised NZ$180 million of new capital from a range of US and New Zealand investors, including existing shareholders Matrix Capital Management and the Peter Thiel backed Valar Ventures.

The transactions are priced at NZ$18.15 per share for 9.92 million shares, representing 8% of the shares on issue after the raise.

Xero has built a powerful software platform supporting over 211,000 customers globally, with the assistance of accountant and bookkeeper partners.

Over the last two months, the company has held partner conferences in Australia, the US and the UK and is seeing acceleration in the acceptance and adoption of its products.Accordingly, the board has decided to raise additional capital to continue building a team in the US market and support continued global growth.

“Xero has had seven years to build the best global accounting platform,” says Rod Drury, CEO, Xero. “That investment puts us in a strong position as the cloud market accelerates.

“The calibre of our investors and our strong cash position sends a clear signal of our aspirations to serve millions of small businesses around the world and attract the world’s best talent.”

Drury says US investors account for NZ$147 million of the capital raised. In addition to Matrix and Valar, the US investors represent some of the “most enduring and well-capitalised asset management firms in the world” according to Drury, which will help assist the company with its strategy and execution in the US market.

“Xero is emerging as the definitive software platform for small business worldwide,” says David E. Goel, managing member, Matrix Capital Management.

“Capturing the power and affordability of cloud-based computing, Xero has democratised accounting, payroll and other business software that was once the privilege of only the largest companies.

“Having empowered hundreds of thousands of small and medium-sized businesses in New Zealand, Australia and the UK, Xero is poised to do the same for its 29 million potential customers in the US.

“We are adding to our investment to help facilitate and accelerate this goal.”

Earlier this month Xero reported Annualised Monthly Committed Revenue of NZ$70.6 million as at 30 September 2013, up from NZ$38.7 million a year earlier, and expects its operating revenuye to exceed NZ$30.3m for the six months to 30 September 2013, up 84% over the same period last year.

Following the raise, Xero will have over NZ$230 million cash on hand.