New Zealand’s Xero raises $49m from Valar, Matrix

The VC firms also purchased stock worth NZ$22 million from Xero's three largest shareholders, taking their total commitment to NZ$82 million. Matrix put in NZ$58 million with Valar contributing the remainder. All the transactions were priced at NZ$6 per share.

Valar first invested in Xero, which trades on the Australian and New Zealand bourses, two years ago, committing NZ$4 million. In February it followed up with another NZ$16.6 million. Xero sought more capital after announcing earlier this month that it would accelerate investment in the business to take advantage of market conditions.

The company claims to have doubled its revenue and customer base since entering the US market last year, integrating with ADP's online payroll platform and acquiring WorkflowMax, another software suite.

It reported an annualized monthly committed revenue of NZ$38.7 million as of September, up from NZ$18 million a year earlier, and expects to double operating revenue for the fiscal year ending March 2013. Xero posted a first-half loss of NZ$7 million and this likely to increase over the second half.

"We have witnessed the disruptive power of cloud computing across the technology universe, and believe Xero is the global market leader in cloud-based small business accounting software," said David Goel, managing member at Matrix, in a statement. "Xero differentiates itself, not only as a model for accountancy, but also as a harbinger for where all software companies will have to go if they want to remain relevant. The future is in the cloud, Xero is already there, and we want to be there."

Following this latest investment, Matrix's holding in Xero will increase to 9.8% from 1.8%, with Valar's holding rising to 7%, from 3.9%. The existing shareholders who sold to the VC firms, Director Craig Winkler, CEO Rod Drury and co-founder Hamish Edward, now own 15.7%, 18.5% and 4.9%, respectively, of the company.

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• Topics
• Australasia
• Technology
• PIPEs
• Expansion
• Venture
• New Zealand
• PIPE
• TMT
• Matrix Partners
• Growth capital