Online accounting software company Xero has raised $49m of new capital from existing US backers. The two investors, Valar Ventures and Matrix Capital Management, placed $49m and also purchased18 million in shares from Xero’s three largest shareholders.
Of the $67m total, Matrix Capital Management invested $47m and Valar $20m.
Since entering the US market last year, Xero has doubled its revenue and customer base, integrated with ADP’s online payroll platform, and acquired practice management suite WorkflowMax. The company said it expects to yet again double its operating revenue for the full year to 31 March 2013.
“Over the past two years of our involvement with Xero, we have seen the team consistently meet and exceed their ambitious goals,” said Andrew McCormack of Valar Ventures. “The incumbent software vendors in the small business accounting space are constrained by channel conflicts and legacy interfaces. The combination of an experienced and focused team, superlative product, good timing and an absolutely huge market give us confidence that Xero has a very long runway.”
David Goel, managing member of Matrix Capital Management, said, “We have witnessed the disruptive power of cloud computing across the technology universe, and we believe that Xero is the global market leader in cloud-based small business accounting software. 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. Matrix is excited and honored to be working with Xero’s world-class management team, which has a product worthy of its talent. No one has developed a technology as simple or as powerful as Xero has.”
Valar Ventures is the investment vehicle of PayPal co-founder Peter Thiel, who was also the first external investor in Facebook.
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