New-Zealand based start-up Xero raises $110M Round

New Zealand based cloud accounting software vendor Xero has announced a $110 million funding round from Silicon Valley venture capital firm Accel Partners and Matrix Capital Management.

Xero has long stated that the US market is the holy grail. Its substandard performance in that market to date have seen it change its model from a channel sales one to more of a direct sales model – a smart move that differentiates its go to market form that of its number one competitor Intuit.

At the same time Xero is announcing that former Dell executive, Russ Fujioka, is joining the company as US President.

Accel is a new investor and is investing USD100 million at NZD20.00 per share, slightly up on the share price immediately before the announcement. Existing investor Matrix Capital Management is adding an additional USD10.8 million. This raise takes Xero’s cash reserved to just shy of $300 million – enough to fuel a broader direct-to-consumer US entry and the likely investments that will require.

The high profile investor and capital raise will give the company to fuel its US initiatives prior to a possible US listing, which definitely “remains in the frame” according to Xero’s CMO, Andy Lark.

Article Source: Forbes, Ben Kepes, February 24, 2015.

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