I wrote back in November of last year that Xero would either need to raise more capital to continue its aggressive growth strategy or else pause for breath. Following a private placement totalling $20 million in February, we learned today that a further $15.6 million has been provided by existing shareholders.
So with an extra $35 million plus in the kitty, I think we have our answer.
Aiming to conquer the markets for small business accounting software in New Zealand, Australia, the UK and America, Xero has always positioned itself as a global player. Becoming a global player costs money and the company has so far proved adept at raising (and spending) it.
Less well-funded rivals would argue that they do not harbour similar world domination ambitions, that they are concentrating on home markets and therefore do not need to be envious of Xero's deep pockets. An alternative view could be that they realise they do not have the table stakes for the global game.