PayPal co-founder Peter Thiel to invest $4 million in Xero online accounting software

PayPal co-founder Peter Thiel to invest $4 million in Xero online accounting software

PayPal co-founder Peter Thiel to invest $4 million in Xero online accounting software 150 150 Ralph Smith

PayPal cofounder Peter Thiel is to invest around $4 million in New Zealand online accounting software provider Xero to enable the Kiwi firm expand into the United States. The San Francisco based technology entrepreneur and investor will be injecting the amount in aide of the Kiwi firm?s planed foray into the US market.

Peter Thiel is also a director with Facebook and will be joining Xero?s US advisory board. According to Xero, Thiel’s investment will be made through his New Zealand investment firm Valar Ventures. The capital raising, to be made via a placement, was expected to close next week, with shares at $1.4918.

Thiel, who helped set up online payments company PayPal and later sold it to eBay for US$1.5 billion, will buy about 2.7 million shares in Xero in a private placement to help support the company’s expansion into the US, giving him about 3 per cent ownership. The shares climbed 3.6 per cent to $1.54 in trading Friday, and are down 8.6 per cent this year.

With the support of Peter and his team, Xero reiterated its believe that it is now sturdily placed to enter the US and capitalize on the opportunity that this market presents, chief executive Rob Drury said in a statement.

Access to PayPal?s extensive networks will provide a major boost as Xero takes on Quickbooks in the vast US small business market. Xero entered the US market last year when it appointed Dell executive Andy Lark to be its first member on the company’s US Advisory Board.

In January, Xero entered into an arrangement with American online banking services provider Yodlee Inc. to offer its accounting system. PayPal is an e-commerce business allowing payments and money transfers to be made through the Internet. PayPal serves as an electronic alternative to traditional paper methods such as checks and money orders.

Thousands of individuals use PayPal to process their finances online. A PayPal account can be funded with an electronic debit from a bank account or by a credit card. The recipient of a PayPal transfer can request a check from PayPal, establish their own PayPal deposit account or request a transfer to their bank account.

With such an existing client base and network, the Kiwi firm is hopeful of increased business as it intends to use such established networks to garner additional business in the US market.

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