Article – BusinessDesk
Oct. 14 (BusinessDesk) Rod Drury, founder of Xero, says the cloud-based accounting company $180 million capital raising from key US shareholders sends a strong signal to rivals that there are no constraints on the funds it needs to win global market …
UPDATED: Xero’s Drury says $180M capital raise ‘sends strong signal’ to competitors
Oct. 14 (BusinessDesk) – Rod Drury, founder of Xero, says the cloud-based accounting company $180 million capital raising from key US shareholders sends a strong signal to rivals that there are no constraints on the funds it needs to win global market share.
The Wellington-based company sold 9.92 million shares at $18.15 apiece, a 1.1 percent premium to their price last week, to Matrix Capital Management, Peter Thiel-backed Valar Ventures and other US investors. It lifted cash on hand rises to $230 million from the $55 million it disclosed as at Sept. 30.
“We’ve been trading on a pretty good valuation and this is a relatively small percentage of the company to give up for a safety net,” Drury told BusinessDesk. “It sends a strong signal to incumbents around the world that we have no constraints.”
“We now need to build the best global management team,” he said. “This is a further signal that we can get the best.”
Xero isn’t planning any acquisitions with the new capital and it is “more about building a war chest, building a tonne of options,” he said.
The sale represents 8 percent of the enlarged capital of the company and gives it a much wider cash buffer to fund growth as it chases 1 million customers, almost five times its current customer base of 211,000.
“Xero is emerging as the definitive software platform for small business worldwide,” David Goel, managing member of Matrix, said in the statement. “Having empowered hundreds of thousands of small and medium-sized businesses in New Zealand, Australia, and the United Kingdom, 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.”
Valar and Matrix last injected funds into Xero in November, with $60 million of new capital, while buying $22 million of shares from director Craig Winkler, Drury, and co-founder Hamish Edwards at the same time.
US investors accounted for $147 million of the funds raised and “represent some of the most enduring and well-capitalised asset management firms in the world, all of whom will assist the company with its strategy and execution in the US market.” it said.
The shares last traded at $17.95.