Xero going public

Xero, the company selling an online accounting solution of the same name, has announced an initial public offering for people wanting to invest in the company.

I blogged back in March that I was impressed with Xero – both the concept and the actual product.

In the Dom Post Tom Pullar-Strecker writes that Xero has a chance but is no sure thing, saying the best asset Xero has is “the admittedly impressive credentials of Xero’s management team and their ability to market the company to success” rather than any technology trend.

Fronde CEO Jim Donovan is more bullish, blogging that “the chartered accountants love the features designed for them, and will no doubt be pushing it to their small business clients” and sees 10,000 customers as a modest milestone. Donovan concludes “So I’m buying in. I’m not betting the house – it’s very pricey for an early stage deal. If the share price drops after the initial euphoria wanes (and it probably will), I’ll probably pick up some more. If it works, and I expect it will, I’ll do very nicely, thank you.”

For my part, having read through the 100 page offer document, I’ve decided to apply for some shares. Now people should not regard this as financial advice of any sort. I am not a financial analyst. What I will say is to point out the obvious. Investing in Xero is a relatively high risk investment as they are a new company with no guarantee that their product will prove popular enough to cover their costs. But the counter to that is the potential rewards are significant – much more than interest from your bank account. So my advice is not to invest any money you can’t afford to lose, if you do invest. But I have enough faith in not just the product, but also the board and management of Xero to take a risk, in the expectation of worthwhile returns.

Disclosure: I have absolutely no financial ties to Xero, its directors or staff. I am socially acquainted with their CEO and their Market Communications Manager. Neither have asked me to invest or to blog about investing. I am doing both at my initiative.