Xero raises $23 million from strategic investors

Just weeks after publishing the hockey stick that shows online accounting software Xero hitting the 6000 customer mark to close out the financial year, today Xero CEO Rod Drury announced the successful raise of $23.2 million in capital that sees the addition of key industry player and ex MYOB founder Craig Winkler as an investor injecting $18 million along side existing investors the BNZ, Sam Morgan and Graham Shaw.

Major hit to the competition

MYOB was subject to a takeover by a private equity firm at the end of 2008, which sparked the move of previous founder and board member Craig Winkler, and no doubt a shift in culture for the business at a time when Xero is just warming up. The ability of private equity to manage a business which needs to rapidly innovate in a competitive environment remains to be seen, but it’s clear that the now private equity lead MYOB will continue to face challenges in finding and retaining key talent and innovation, and with the visionary founder now moving his money into Xero, the new era of online accounting lead by Xero is in full swing.

Existing investor top-up

The shares will be issued at 90 cents in a round open to all existing investors, so while Xero don’t need your additional money, if you bought in at launch, nows a good time to top up and bring your average buy price down slightly. With a strong growth curve, a freshly capitalised balance sheet, a foothold in New Zealand, the UK and Australia, and momentum building from a base of regular customers, Xero is well on it’s way as a powerful global business that’s changing the way small businesses roll in the new world economy.

Big congrats to the Xero crew, this is a big win for the industry and a great story for the NZX at a time when capital is generally tight.