Why Xero is a safe Investment - The Xero IPO

Today the opportunity to invest in the first listing on the New Zealand Stock Exchange this year begins with the IPO of Xero. Plenty of people have repeated the announcement online, and the press appear to be still playing it safe, possibly waiting until Xero shares are fully subscribed, so I think its important to make a couple of statements I haven’t yet heard about why Xero is a safe, smart Investment.

1. Xero works when the economy is up and down

Xero is a financial management application for small medium businesses, and so provides value when times are good and you’re growing and sales are moving fast, or when times are tight and you need to make sure all your money is coming in on time and less money is going out. When it comes to business technology solutions, this is key, you need to know the product is an essential that you need to make money.

2. Xero already has strong financial+ backing

Xero is hitting the public market earlier than what has been done before, so since they’re an early stage business it considered a much higher risk, and Xero echo this clearly to ensure people come in knowing this is a long term investment. But with a little analysis, the reality is they’ve already jumped their first investment hurdle and are already building Xero with the backing of existing high net worth individuals who have made their money on building and selling software companies. While a driving force, and a man to bank on, Rod’s not going alone on this and has pulled in Sam Morgan and highly successful but possibly less known Guy Haddleton who sold his Business planning software company for $US160 million, And this is no name dropping exercise its a signal of confidence of people who demand and make success.

3. Reputations and Trading Stability

The people who have already invested, along with many stepping up the plate for some action now (Sam Morgan is buying $1million worth at the same price everyone else can) are people who together are investing for the long term, and this provides stability to the public trading environment. People like Rod, Sam, Guy, and the other Directors Phil Norman, Hamish Edwards, and Graham Shaw all value their reputations above all else, its the primary currency for successful people. The listing of Xero on the NZX is a signal from these key people that Xero will work and they’ll back it to make sure it does.