How Xero Made It By Doing Everything Backwards
“It’s rare for a startup to go public almost within one year of being founded. But then again, how many startups do you know from Wellington, New Zealand,” writes Ariel Bogle for Mashable.
New Zealand start-up Xero “makes cloud-based accounting software for small business” and “they bucked the Silicon Valley roadmap by not waiting to “fully mature” before listing on the stock exchange,” reports the article.
“We’ve done everything backwards,” said Rod Drury, Xero founder and CEO.
“We’ve listed first, then got hedge funds in, then our last fund was with Accel, one of the world’s top ventures.”
After Xero was founded in 2006 out of its founders’ pockets, “Xero listed on the New Zealand Stock Exchange in 2007, followed by the Australian Stock Exchange in 2012.” “In 2015 Palo Alto venture firm Accel agreed to invest NZ$132.9 million as part of a NZ$147.2 million (143.1 million) round aimed at funding growth in the U.S.” It also raised funds from Valar Ventures.
Drury admitted that Xero’s path had its challenges as at that point it had made a loss in the public eye for almost one decade.
We’re really on that tightrope between using cash to grow and being a loss-making public company. If someone had said, ‘Look, you’re going to be a loss-making public company for 10 years,’ I don’t know if I would have signed up for that,” he said.
“We still get asked ‘when will you pay my dividend and how come you’re making a loss?’ Well, we have so much capital; investors don’t want us to give money back. They want us to invest for long-term growth and spend more than we earn,” said Drury.
“The advantage of listing early in Australia or New Zealand is that a company can access the capital markets when they are still small. Sometimes, that means they can access funding on more attractive terms than if they went to venture capitalists,” said Claude Walker, an investment research analyst at Motley Fool, which owns shares in Xero.
Xero’s story is now gaining traction in the U.S. and there’s “a potential U.S. listing in the offing, as well as a recently announced partnership with the bank Wells Fargo,” according to the article.
Article Source: Mashable, Ariel Bogle, September 13, 2016
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