Rod Drury, founder of Xero, says the cloud-based accounting company $180 million capital raising from key US shareholders sends a strong signal to rivals that there are no constraints on the funds it needs to win global market share.
The shares jumped 9.8 per cent to $19.70 and earlier touched a record $19.90 when they resumed trading, after being halted for the capital raising. The company sold 9.92 million shares at $18.15 apiece, or 1.1 per cent above their price last week, to Matrix Capital Management, Peter Thiel-backed Valar Ventures and other US investors.
Cash reserves have jumped to $230 million from the $55 million it disclosed as at September 30.
"We've been trading on a pretty good valuation and this is a relatively small percentage of the company to give up for a safety net," Drury told BusinessDesk. "It sends a strong signal to incumbents around the world that we have no constraints."
"We now need to build the best global management team," he said. "This is a further signal that we can get the best."