​Xero secures NZ$147m in funding to grow US business

Xero has received NZ$132.9 million from Accel Partners, and an additional NZ$14.3 million from its largest investor, Matrix Capital Management.

Cloud accounting solutions provider Xero has secured a total of NZ$147.2 million in additional funding from new investor Accel Partners, and existing investor Matrix Capital Management.

Silicon Valley-based Accel Partners will invest NZ$132.9 million at NZ$20 per share, while Matrix Capital Management, Xero's largest investor, has agreed to put in an additional NZ$14.3 million. Upon completion of the new investments, which are expected to close in mid March, Xero's cash balance will be approximately NZ$285 million.

According to the company, the funds will be used to fuel its growth in the United States and the United Kingdom. During the first half of the 2015 financial year, the company had reported that it doubled its customer base in the United Kingdom, and managed to lift the amount of paying customers in the United States by 120 percent, from 10,000 to 22,000.

However, at the time, the New Zealand-based company admitted that it did not properly execute the plans it had for its US business, which contributed to the company's NZ$24.5 million half-year net loss, noting that it was going to make changes to leadership in the region in order to accelerate growth.

In light of this, Xero has appointed former Dell executive Russell Fujioka as US president, effective immediately. Fujioka, who will be based in Xero's US headquarters in San Francisco, will be responsible for sales, digital marketing, and operational management.

Xero CEO Rod Drury said the additional capital and Fujioka's appointment will help accelerate its opportunities in the US.

"We went looking for additional funding even though we had $130 million in the bank, but Accel was really keen to join the team. For us that's a huge endorsement for a tier one firm like that to come in. Just having this much cash puts us in a very strong position," he said.

Last November, Xero acquired Seattle-based cloud accounting startup Monchilla for $4.1 million, in a move to boost its US presence.

Drury said that the integration of the company has been progressing well, and that by the end of the year, Xero will have expanded its presence across all states in the US.

He added that the company just passed the $100 million annualised revenue mark, and Australia is exceeding a 100 percent growth rate, while the company is experiencing a global growth rate of 80 percent.

The company also announced that former Salesforce chief financial officer Graham Smith has joined the Xero board as an additional independent, non-executive director.

Xero's rival, MYOB, is scheduled to announce its full-year 2014 financial results on Thursday.