Online accounting systems company Xero focusing on the importance of developing its strategic relationships in the United States off the back of a fresh $4 million deal with PayPal co-founder Peter Thiel. In 2004 Mr Thiel was also the first outside invest
Online accounting systems company Xero focusing on the importance of developing its strategic relationships in the United States off the back of a fresh $4 million deal with PayPal co-founder Peter Thiel.
In 2004 Mr Thiel was also the first outside investor in social networking giant Facebook. In 2002, PayPal the online payments company he helped to form and then led, was sold to eBay for $US1.5 billion.
Xero chief executive Rod Drury told the National Business Review said the most significant part of the deal with Mr Thiel was access to networks and highlighted the importance of early public listing on the NZX.
“We’ve been able to use the public market to get risk capital for expansion and growth… and good globally savvy investors are interested in New Zealand,” he said.
“Having a New Zealand public company is making it easier to do these deals and a key part of the strategy was listing early and getting the money to get resources quickly allows the deal.”
Xero’s next big step is the going live with bank feeds in the United States following an agreement announced last January with Yodlee.
Yodlee’s software will be sued to extend automated daily bank account feeds to Xero’s online accounting products.
Following that, Mr Drury said Xero was addressing a “whole lot” of partnership opportunities in the US and was also looking at establishing a team in San Francisco.
“The deal with Peter Thiel validates that drive,” he said.
“Access to their extensive networks will provide a major boost as we take on [competitor] Quickbooks in the vast US small business market.
“We have taken a measured approach to our US market entry so far. With the support of Peter and his team, we believe we are now strongly positions to enter the US and capitalise on the opportunity that this market represents.”
Mr Thiel’s investment will be made through his New Zealand investment company Valar Ventures LP. The capital raising, made via a placement, was expected to close next week priced at $1.4918 a share, the volume-weighted average share price of Xero over the 30 trading days prior to October 20.
Xero’s share price rose 4.7% on the news and this morning were trading at $1.56 (NZX:XRO).
