Xero Investment Prospectus 2007

Xero share prospectus for listing on New Zealand Stock Exchange in 2007
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xero offer share share offer business offer document
Xero share prospectus for listing on New Zealand Stock Exchange in 2007
About manojranaweera

xero offer share share offer business offer document
<p>Financial Advisor to the Board  
Cameron Partners Limited
Lead Broker  
First NZ Capital Securities Limited 
Joint Organising Sponsors  
Cameron Partners Limited 
First NZ Capital Securities Limited
11 May 2007
Investment 
statement
xero lIve 
lImIted
share offer
+ prospectus 
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choosing an investment When deciding whether to invest, 
consider carefully the answers to the following questions that can be 
found on the pages noted below:
• What are my risks? (pages 76 to 77)
• What sort of investment is this? (pages 72 to 73)
• Who is involved in providing it for me? (page 74)
• How much do I pay? (page 74)
• What are the charges? (page 74)
• What returns will I get? (page 75)
• Can the investment be altered? (pages 77 to 78)
• How do I cash in my investment? (page 78)
• Who do I contact with enquiries about my investment? (page 78)
• Is there anyone to whom I can complain if I have problems with the 
investment? (page 79)
• What other information can I obtain about this investment? (page 79)
In addition to the information in this document, important 
information can be found in the current registered prospectus for the 
investment. You are entitled to a copy of that prospectus on request.1
choosing an investment adviser You have the right to request 
from any investment adviser a written disclosure statement stating 
his or her experience and qualifications to give advice. That document 
will tell you:
• Whether the adviser gives advice only about particular types of 
investments;
• Whether the advice is limited to investments offered by 1 or more 
particular financial organisations; and
• Whether the adviser will receive a commission or other benefit from 
advising you.
You are strongly encouraged to request that statement. An investment 
adviser commits an offence if he or she does not provide you with 
a written disclosure statement within 5 working days of your request. 
You must make the request at the time the advice is given or within 
one month of receiving the advice.
In addition:
• If an investment adviser has any conviction for dishonesty or has 
been adjudged bankrupt, he or she must tell you this in writing; and
• If an investment adviser receives any money or assets on your 
behalf, he or she must tell you in writing the methods employed 
for this purpose.
Tell the adviser what the purpose of your investment is. This is important 
because different investments are suitable for different purposes.
INveStMeNt deCISIoNS 
are very IMPortaNt.  
they often have long-term 
consequences.  read all documents 
carefully.  ask questIons.  seek advIce 
before commIttIng yourself. 
the InformatIon In thIs sectIon Is 
requIred under the securItIes act 1978. 
IMPortaNt 
INForMatIoN
important notice This Offer Document is for an offer of Shares in 
Xero Live Limited (“Xero”). 
It is a combined investment statement and prospectus for the 
purposes of the Securities Act and the Securities Regulations, and has 
been prepared as at, and is dated, 11 May 2007.
The information required to be contained in an investment 
statement by the Securities Regulations 1983 is set out in the sections 
entitled “Important Information” (see above) and “Answers to 
Important Questions” (pages 72 to 79). The purpose of those sections 
of this Offer Document is to provide certain key information that is 
likely to assist a prudent but non-expert person to decide whether or 
not to acquire Shares in Xero under the Share Offer. However, investors 
should note that other important information about the Share Offer, 
the Shares and Xero is available in the other sections of this Offer 
Document and in the information available for inspection at the 
registered office of Xero (described further on page 79). 
registration of offer document A copy of this Offer Document 
duly signed, and having copies of the documents required by section 
41 of the Securities Act attached, has been delivered to the Registrar 
of Companies for registration in accordance with section 42 of the 
Securities Act.
The documents required by section 41 of the Securities Act to be 
attached to the copy of this Offer Document delivered to the Registrar 
of Companies for registration are:
(a) the Auditor’s report in respect of certain financial information 
included in this Offer Document (set out on pages 70 to 71);
(b) the signed consent of the Auditor to the Auditor’s report appearing 
in this Offer Document; 
(c) the signed consent of Ernst & Young to the inclusion in this Offer 
Document of results of independent research undertaken by it for Xero;
(d) an acknowledgment from NZX to the effect that an application has 
been made to NZX for permission to list the Shares, and all the 
requirements of NZX for the listing of the Shares that can be 
complied with at that time have been duly complied with; and
(e) copies of the material contracts referred to in clause 17 on page 84.
new zealand exchange listing Application has been made to 
NZX for permission to list the Shares, and all the requirements of NZX 
relating thereto that can be complied with on or before the date of this 
Offer Document have been duly complied with. However, NZX accepts 
no responsibility for any statement in this Offer Document. Initial 
quotation of the Shares is expected to occur on 5 June 2007. NZX has 
authorised Primary Market Participants to act on the Share Offer.
electronic offer document This Offer Document is available in 
electronic form at www.xero.com. The Offer constituted by this Offer 
Document in electronic form is available only to residents in  
New Zealand. The availability of this Offer Document on the website 
is for the purposes of the Offer in New Zealand. The distribution of 
the Offer Document in electronic form may be prohibited in certain 
jurisdictions, including the United States, Canada and the United 
Kingdom, and is not available to residents of such jurisdictions. 
Persons who access the electronic version of this Offer Document 
should ensure that they are entitled to do so under applicable laws 
and, if so, that they download and read the entire Offer Document. 
The New Zealand Securities Act prohibits the allotment of Shares 
to any applicant who did not receive a copy of this Offer Document 
before applying. Accordingly, no person may pass an Application Form 
on to another person unless it is attached to a hard copy of this Offer 
Document or the complete and unaltered electronic version of this 
Offer Document.
overseas investors The Share Offer is only being made to 
members of the public in New Zealand. No person may offer, invite, sell 
or deliver any Shares or distribute any documents (including this Offer 
Document) to any person outside New Zealand. This Offer Document 
may not be sent into or distributed in the United States.
Unless otherwise agreed with Xero, any person or entity applying 
for Shares under the Share Offer will, by virtue of such Application, be 
deemed to represent that he, she or it is not in a jurisdiction that does 
not permit the making of the Share Offer or an invitation of the kind 
contained in this Offer Document and is not acting for the account or 
benefit of a person within such a jurisdiction. Neither Xero, nor any 
of its Directors, officers, employees, consultants, agents, partners or 
advisers accepts any liability or responsibility to determine whether a 
person is able to participate in the Share Offer.
no guarantee No person, Director or entity guarantees the Shares 
offered under this Offer Document. Only Xero undertakes any liability 
in respect of the Shares, and then only to the extent required by law.
takeovers code The Takeovers Code, amongst other things, 
prohibits any person (together with their associates (as defined 
in the Takeovers Code)) from becoming the holder or controller 
of 20% or more of the voting rights in the Company other than in 
compliance with the requirements of the Takeovers Code. Investors 
are advised to seek legal advice in relation to any act, omission or 
circumstance which may result in that investor breaching any provision 
of the Takeovers Code.
risk and suitability of an investment in xero Xero is an 
early stage software business and an investment in Xero is inherently 
risky. As such, it may not suit all investors. 
The Share Offer does not take into account each investor’s 
investment objectives, financial situation and particular needs. 
It is important that investors read this Offer Document in its entirety 
before deciding whether to apply to purchase any Shares. In particular, 
investors should consider the risk factors that could affect the 
performance of Xero (including those set out under the heading 
“What are my risks?” on pages 76 to 77), particularly with regard to 
their personal circumstances (including financial and taxation issues). 
Investors who are in any doubt as to the action they should take, 
should consult their stockbroker, solicitor, accountant or other 
financial adviser before deciding to invest.
definitions Capitalised terms used in this Offer Document have a 
special meaning and are defined in the Glossary section of this Offer 
Document on pages 94 to 95 or in the relevant section in which the 
term is used.
Unless otherwise indicated, $ or NZ$ refers to New Zealand Dollars.
All references to time are to time in New Zealand.
1   this is the wording required by schedule 3d to the securities regulations 1983 which contemplates a separate investment statement and prospectus. 
for this share offer, the two documents have been combined and accordingly the prospectus available on request is this offer document.
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4  offer statIstIcs and Important dates 
6  
Investment hIghlIghts  
10  chaIrman’s letter  
12  founders’ letters 
16  detaIls of the share offer 
22  market opportunIty & competItIve posItIonIng 
28  about xero 
38  xero’s dIrectors and management team
46  prospectIve fInancIal InformatIon
50  hIstorIc fInancIal InformatIon
72  answers to Important questIons
80  statutory InformatIon 
86  applIcatIon InstructIons
94 glossary of terms
96  dIrectory


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oFFer StatIStICS 
aNd IMPortaNt 
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important dates
share offer summary
This timetable is indicative only. Xero reserves the right to:
(a) extend the Closing Date of the Share Offer or close the Share Offer early, 
in which case the dates referred to opposite will change accordingly; 
(b) withdraw the Share Offer at any time before the Allotment Date; and
(c) accept late Applications, either generally or in individual cases.
Issuer 
Xero Live Limited
Shares being offered in the Share Offer 
15,000,000
Oversubscriptions 
Up to 3,000,000
Total number of shares being offered 
Up to 18,000,000
Offer Price 
$1.00
Shares on issue if Share Offer is fully subscribed (excluding oversubscriptions) 
55,000,000
Offer Document registered 
Friday, 11 May 2007
Share Offer opens 
Monday, 14 May 2007
Share Offer closes 
Wednesday, 30 May 2007
Allotment Date 
No later than Tuesday, 5 June 2007
Quotation and trading of shares expected to commence on the NZSX 
Tuesday, 5 June 2007 
Allotment notices mailed 
Tuesday, 5 June 2007 
FASTER statements mailed 
No later than Thursday, 7 June 2007
Refund cheques mailed (if applicable) 
No later than Friday, 8 June 2007 

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INveStMeNt 
hIghLIghtS
xero provIdes an onlIne accountIng 
solutIon for small and medIum sIzed 
enterprIses (smes), whIch typIcally 
have less than 20 employees.
xero was Incorporated In July 2006 by rod drury, an experIenced new zealand 
based technology entrepreneur who has a record of buIldIng successful 
software busInesses, and hamIsh edwards, the owner of an sme accountIng 
busIness and a publIshed commentator on smes. 
theIr vIsIon Is to create a global software company from new zealand based 
on the delIvery over the Internet of accountIng software for smes.
www.xero.com
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Xero has recruited a high quality team, as at 30 April 
2007 comprising 27 people including the founders, 
Rod Drury and Hamish Edwards.
The management team is supported by an 
experienced board of Independent Directors 
comprising Phil Norman, Graham Shaw, Guy 
Haddleton and Sam Morgan.
Xero currently intends to establish subsidiaries in 
the UK and Australia and recruit in-market staff to 
develop its business in these locations. Xero has been 
accepted into the New Zealand Trade and Enterprise 
(“NZTE”) Beachheads programme for the UK and has 
established a UK advisory board, comprising senior 
UK business people, to assist in the strategic 
development of the business there.
2
hIgh qualIty  
team
1
sIgnIfIcant market 
opportunIty
SMEs are the most common form of business 
organisation. In all OECD countries, they constitute 
over 90% of all businesses by number. 
Unlike many other software systems, which are 
largely optional, accounting systems are all but a 
necessity for SMEs. The predominant accounting 
software applications that exist today for SMEs are 
installed on desktop computers. 
The Directors believe the time has arrived for SMEs 
to access software by using Internet technologies.
They also believe there is an opportunity for a fast 
moving, well funded business, without a legacy 
business model, to address the expected migration by 
SMEs to online accounting.
key Investment 
consIderatIons 
thIs share offer 
represents an 
opportunIty to  
Invest In an early 
stage new zealand 
technology 
busIness, wIth 
an InternatIonal 
strategy. the key 
features of thIs 
opportunIty are:
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Xero is an early adopter of the web-based business 
model that is technically known as software as a 
service (“SaaS”). This model is ideally suited to the 
needs of the large and fragmented SME market.
Rather than installing software on independent 
desktops or networks at each customer’s location, 
Xero’s software is made available online through 
a secure login. Importantly, the software does not 
require installation and therefore can be frequently 
modified and updated with minimal downtime 
for customers. 
Xero’s customers will pay a monthly subscription 
to use its web-based accounting system, rather than 
paying for an up-front software licence and then 
having to pay ongoing upgrade, maintenance and 
service charges. 
The Directors believe that the SaaS model will 
enable Xero to benefit from having a centralised 
operating environment with lower infrastructure 
costs and a predictable revenue stream. The SaaS 
model should also provide Xero with a significant 
opportunity for long term profitability.
accepted new 
busIness model
5
Xero’s strategy is to become a leading provider of 
SME online accounting solutions in its target markets. 
It intends to use the experiences of the consumer 
software market (based on Internet technology) 
and apply these to the SME market to create an 
internationally scalable business.
Key elements of its strategy include:
• Building the brand and business in New Zealand 
initially and expanding into the UK and Australia. 
The aggregate target market is large – the number 
of SMEs in these regions is around 5.8 million, split: 
UK, 4.3 million; Australia, 1.2 million; and New 
Zealand, 322,000. 
• Focusing in each market on the key market 
segments which it believes, through its research 
and experience to date, are likely to be early 
adopters of its offering: technology companies, 
professional services firms (including accounting 
practices) and not-for-profit organisations.
• Strengthening its market presence by establishing 
and expanding national partnerships and alliances.
• Expanding its customer support capabilities which 
Xero believes will be a key differentiator for SMEs.
strong busIness 
strategy
4
Xero’s accounting system is different to most 
installed SME accounting systems currently available 
in the marketplace in the following important ways:
• It is easy to use – limited training is required and 
the product is customer friendly.
• It is online – there is no software to install.  
Xero is accessible any time through any Internet 
connection in the world. Xero’s login is secure, 
and Xero has an internal security strategy to 
protect the Xero products from viruses and 
spyware. All data is automatically backed up daily. 
• Continuous innovation – Xero can be updated 
frequently with product enhancements as well 
as quickly responding to compliance changes.
• It is cost effective – a pay as you go and pay as  
you grow pricing model.
• It provides real time access for advisers –  
enables an SME to easily share information with 
its advisers.
• It assists decision making – provides immediate 
visibility of important information for SMEs to run 
their businesses and make informed decisions.
• It is easy to switch to Xero – there should be 
minimal cost for an SME to switch to Xero from 
another accounting system.
xero’s product Is 
compellIng to smes
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Since its establishment, Xero has:
• Raised capital of $2.8 million from the founders, 
Directors and selected employees of Xero. It has 
also received $100,000 in Government grants and 
has been awarded a further $750,000 of 
Government funding to be drawn down over the 
next five years to assist with R&D and UK market 
entry. The funding received to date has enabled 
Xero to get its initial product offering market ready.
• Developed its core online accounting software 
product and the foundations for its operational 
systems and processes necessary to enable the 
business to scale internationally.
• Tested the product with more than 140 users since 
November 2006. Since starting to sell the product 
(in a limited release) since April 2007 Xero has 
attracted over 100 paying customers.
• Recruited a strong management team with the 
skills required to enable Xero to grow the business 
internationally.
• Established some key partnering relationships 
with retail banks, chartered accountancy firms and 
other businesses to help accelerate its customer 
penetration and market success.
• Been selected to represent New Zealand as a 
finalist in the worldwide Technium Challenge 
in Wales, UK in late May 2007.
• Developed the Xero brand. 
xero has already 
achIeved momentum
6
The Directors believe that Xero can create a strong 
market position for itself in the online accounting 
software market if it captures the opportunity that 
exists here and now. Xero has already recruited an 
experienced team, has a compelling business model,  
a product available for full market release in the 
second half of 2007, a developing brand and some  
key business relationships to help it succeed.
However, it needs to move quickly, with an 
appropriate level of capital, to establish its business 
in New Zealand and then credibly enter its targeted 
overseas markets.  
the opportunIty  
for xero Is now
7
the dIrectors have decIded to raIse 
the capItal needed for the further 
development of xero through a publIc 
offer because they belIeve It Is the 
most approprIate means of obtaInIng 
the fundIng requIred to enable xero 
to execute Its busIness plan. 
Another important benefit of Xero operating as a 
public company, with visible reporting and good 
governance structures, is that it should help instil 
confidence amongst Xero’s customers about Xero and 
its offering. This should help to further accelerate the 
implementation of Xero’s business plan.
The Directors believe that if Xero were to remain a 
privately owned company based in New Zealand, 
without an appropriate level of funding and the 
profile and transparency which comes with being a 
public company, it would not be able to capitalise on 
the immediate international opportunity for Xero.
Xero is an early stage software business with no 
specific track record of success for its business or 
operations. Accordingly, please read all the 
information in this Offer Document, and talk to a 
qualified adviser that you trust before deciding 
whether or not to subscribe for Shares in Xero under 
this Share Offer. The principal risks of investing in 
Xero are set out on pages 76 to 77.
One of the main principles of investing money is 
to have a diversified portfolio of investments. 
Potential investors should carefully consider the size 
of their application relative to their other 
investments.
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ChaIrMaN’S 
Letter
11 may 2007
phIl norman
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From the outset Xero was established with the 
objective of growing internationally. It has a highly 
skilled team and an experienced board of directors. 
the Ceo and co-founder, rod drury, is an 
accomplished and well-respected entrepreneur. rod’s 
track record shows that he has the ability to detect 
fundamental shifts in the Information and 
Communications technology (“ICt”) industry and 
then create software products that utilise new 
technologies. In the past, rod has created businesses 
of significant value. his most recent success was the 
sale, in 2006, of his former email management 
software business, afterMail, to Quest Software 
of the USa.
Xero has aspirations for international growth in 
targeted markets, but to realise its ambitions Xero 
needs the necessary capital resources to capture the 
market opportunity that exists for it right now. 
Xero considered seeking private venture capital 
funding, but the pool of such funding available to 
growing technology businesses in New Zealand is 
relatively small. accordingly, the directors have 
decided to raise capital for the development of Xero, 
via a public flotation of the Company. We believe that 
the capital raised and the profile created by a public 
offer will greatly assist in the acceleration of Xero’s 
business plan.
We estimate around one third of the Shares being 
offered will be allocated to certain strategic parties 
including private investors, industry influencers, 
accountants, high net worth individuals and  
New Zealand institutions. the Independent directors 
of Xero, including myself intend to subscribe,  
in aggregate, for 1.35 million Shares at the offer Price.
the balance of the Shares under the Share offer 
will be made available to clients of First NZ Capital and 
to any other applicants.   
this is an exciting opportunity to participate in a 
high-quality, entrepreneurial New Zealand software 
company that has the potential to become a 
significant participant in its chosen geographic 
markets. however, Xero is an early stage business, 
similar to a venture capital opportunity, and is, 
therefore, a high-risk investment. the directors see 
Xero as a growth opportunity and do not expect the 
Company to be profitable for at least three years. 
there are risks that may impede Xero from achieving 
its growth aspirations. that said, the directors and 
management of Xero are using their best endeavours 
to ensure that Xero’s business plan and its milestones 
and targets are carefully thought through and are 
realistically set.
Full details of the Share offer are set out in this offer 
document and it should be read carefully in its 
entirety before making an investment decision.
on behalf of the directors, I commend this Share 
offer to you and, if you do decide to invest, welcome 
you as a shareholder of Xero.
yours sincerely
phil norman
chairman
“thIs Is an excItIng opportunIty     to partIcIpate In a hIgh-qualIty, entrepreneurIal  
new zealand software company that has the potentIal to become a sIgnIfIcant 
player In Its chosen geographIc markets.”
dear Investor on behalf of the dIrectors of xero, I am pleased  
to present you wIth thIs opportunIty to Invest In a new zealand 
technology venture.

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rod drury
hamIsh edwards
FoUNderS’
LetterS
11 may 2007
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dear Investor as an owner of several small  
businesses myself, it was obvious to me that there 
was not an accounting product available in the 
market that provided a daily focus on cash flow with 
the ease of use that most small businesses need.  
In my businesses, I place a high value on the input of 
advisers. It frustrated me how difficult it was to share 
the numbers with my accountant, hamish edwards, 
who acted as the virtual CFo for afterMail.
as a technologist, I have been watching new web 
development technologies evolve. the time is now right 
for a change that re-defines the economics of delivering 
business systems to small and medium sized enterprises.
as an entrepreneur who has founded, built and 
sold a number of companies, I have been looking for 
an opportunity to build a long-term global business 
from New Zealand – a real example of New Zealand’s 
knowledge economy. Web based SMe accounting 
provides an opportunity to do this.
the decision to proceed with an IPo at such an 
early stage is not a decision we have taken lightly. 
however, the opportunity for Xero has arrived. going 
public is the best path if we are going to credibly enter 
overseas markets with the resources it takes to be 
successful.
I hope you will join us on our journey.
yours sincerely
rod drury 
founder and ceo
dear Investor together, rod and I decided 
to set out to re-define the ways accounting can  
work for small and medium sized enterprises.  
these organisations make up a high percentage  
of the number of businesses operating in most 
countries, employing, in some instances, up to  
two-thirds of the workforce.
typically, these businesses are privately owned 
(often by the founder, their family or a small group 
of investors) and are often sensitive to shifts in their 
balance sheet and cash flow. accordingly, the ability 
to monitor financial performance and plan is very 
important. Based on my own experience, businesses 
of this size generally do not have the tools or resources 
to tell them easily and quickly what they need to know 
about their financial position and performance.
With Xero, we have developed an accounting 
system that is connected to the business in real-time 
and is, therefore, able to tell business owners what 
they most need to know, when they most need to 
know it – simply, effectively and economically.
We believe we have developed an online 
accounting system that is versatile enough to be used 
by a range of businesses across the world.
We have already received a strong response in  
New Zealand, not just directly from potential SMe 
customers, but also from accountancy firms and 
financial institutions, who we believe will become 
important advocates for Xero.
We hope you will choose to invest in Xero and share 
our vision to create an international software company.
We invite you to join us on this exciting journey.
yours sincerely
hamish edwards 
founder and cfo
“the tIme Is now  
rIght for a change 
that re-defInes the 
economIcs of 
delIverIng busIness 
systems to small  
and medIum sIzed 
enterprIses.”
“we have developed 
an accountIng 
system that Is 
connected to the 
busIness In real-tIme 
and Is, therefore, 
able to tell busIness 
owners what they 
most need to know.”

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advisers become proactive partners 
with access to customers’ real-time data, 
meaning less time collating data and 
more time to interpret and use the information.
collaborate

Investors should also refer to the 
detaIled InformatIon outlIned In the 
sectIon headed “answers to Important 
questIons” on pages 72 to 79.
the share offer Xero is offering for subscription 
15.0 million Shares under the Share offer at an  
offer Price of $1.00 per Share with the ability to  
accept oversubscriptions of up to $3.0 million 
(representing a further 3 million Shares at the offer 
Price). accordingly, Xero is seeking to raise up to  
$18.0 million, inclusive of oversubscriptions.
the Shares are being offered to New Zealand 
resident institutional, professional and retail investors.
minimum offer amount the minimum amount 
which must be raised by Xero through the issue of 
new Shares under the Share offer is $10.0 million, 
being 10 million Shares at the offer Price. If valid 
acceptances for the minimum subscription amount 
are not received by the Closing date, Xero will 
withdraw and cancel this Share offer, in which case 
all application monies received will be refunded (with 
interest, if any) within six business days after the 
Closing date.
share offer not underwritten the Share offer 
is not being underwritten.
allocations approximately 5.0 million Shares  
(representing one third of the number of Shares being 
offered under the Share offer) have been reserved for 
allocation to certain private investors, industry 
influencers, accountants, high net worth individuals 
and New Zealand institutions. 
In addition, the Independent directors of Xero 
intend to subscribe, in aggregate, for 1.35 million 
Shares made under the Share offer at the offer Price. 
the Independent directors do not guarantee nor 
undertake any liability in respect of the Shares.
the balance of the Shares under the Share offer, 
being approximately 8.65 million Shares, will be 
made available to clients of First NZ Capital and to 
any other applicants. 
the Joint organising Sponsors reserve the right to 
make further allocations at their discretion.

thIS oFFer doCUMeNt IS a CoMBINed INveStMeNt 
StateMeNt aNd ProSPeCtUS IN reSPeCt oF aN 
oFFer oF ShareS IN Xero LIve LIMIted. 
the FoLLoWINg SeCtIoN oUtLINeS the MaIN 
terMS oF the Share oFFer.
detaILS oF the 
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selling restrictions on existing shareholders 
each of the existing Shareholders in Xero is restricted 
from disposing of the legal or beneficial ownership 
of the Shares held or controlled by them as at the date 
of this offer document for a period of 12 months from 
the date that Xero’s Shares are first quoted on the NZSX.  
this restriction is contained in a deed of embargo 
entered into by each existing Shareholder and Xero.  
the deeds provide that the existing Shareholder 
may only dispose of their legal or beneficial ownership 
of those Shares within the 12 month embargo period 
with the approval of Xero (and in respect of Shares 
held, respectively, by trusts of rod drury and hamish 
edwards, with the approval of Xero and the Lead 
Broker) or to an offeror who has made a successful full 
or partial takeover offer to all Shareholders under  
the takeovers Code. 
reasons for the ipo the directors have decided to 
raise the capital needed for the further development 
of Xero’s business through a public offer because they 
believe it is the most appropriate means of obtaining 
the funding required to enable Xero to execute its 
business plan. 
this Share offer will:
• Provide Xero with the funding required to grow its 
business in New Zealand and to gain initial market 
entry in the UK and australia.
• Provide visible reporting which should show that 
Xero is a well capitalised company, with committed 
shareholders, and long-term growth ambitions as a 
public company. this should help instil confidence 
amongst Xero’s customers about its offering and 
help to further accelerate the implementation of 
Xero’s business plan.
• Provide Xero with the ability to base its business in 
New Zealand and create an opportunity that is 
attractive to international talent, including high 
quality New Zealand It professionals.
• allow Xero to utilise public company governance 
structures to create a high-quality reporting and 
control environment, and provide a good base from 
which Xero can pursue the international growth of 
its business.
• Further raise Xero’s profile.
the directors believe that if Xero were to remain a 
privately owned company based in New Zealand, 
without an appropriate level of funding and the profile 
and transparency which comes with being a public 
company, it would not be able to capitalise on the 
immediate international opportunity for Xero that 
exists right now.
use of proceeds from the ipo the proceeds from 
this Share offer will be used by Xero over the next 
three years to:
• grow customer numbers in New Zealand with the 
aim of firmly establishing Xero as New Zealand’s 
leading online accounting system provider to SMes.
• recruit additional staff to grow the business, 
including personnel in the UK and australia.
• Invest in the operational infrastructure required to 
scale the business.
• Provide working capital to sustain the operations 
of the business while Xero builds monthly recurring 
revenue streams.
although it is intended that the proceeds from the  
IPo will be used for the above purposes, the directors 
are aware that Xero, like any early stage company, 
needs to be flexible with its strategies, plans, targeted 
milestones, operations and affairs so that it can, 
quickly and at short notice, respond to change, such 
as changes in the accounting or software industries, 
its competitive environment and insights it gains 
about its operations, costs and investment 
requirements as the business grows. accordingly, 
Xero’s strategies, plans, targeted milestones, 
operations and affairs, as described in this offer 
document, are very much subject to change as Xero 
seeks to evolve from a start-up company into an 
established business. 
the directors believe that the amount raised 
under this Share offer will enable Xero to pursue  
its current business strategy. however, events such  
as a change in strategy, financial performance not 
meeting expectations or a desire to accelerate its 
expansion plans may require Xero to raise further 
capital in the future.
summary of the share offer structure
Opening and Closing Dates the opening date of the 
Share offer is 14 May 2007 and the Closing date is  
30 May 2007. Xero may vary these dates at its discretion.
Pricing the offer Price for the Shares is $1.00 per Share.
How to Apply applications for Shares must be made 
on the application Form contained in or accompanying 
this offer document.

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application Forms must be completed in full and 
submitted in accordance with the instructions set out 
below and on the page preceding the application Form.
an application will constitute an irrevocable offer by 
the applicant to subscribe for the number of Shares 
specified in the application Form, or such lesser 
number of Shares as may be allocated to it, on the 
terms and conditions set out in this offer document 
and the application Form. By submitting an application 
Form, applicants agree to be bound by those terms 
and conditions and the Constitution of Xero.
Minimum Applications applications under the Share 
offer must be made for a minimum of 1,000 Shares 
and, thereafter, in multiples of 500 Shares.
Application Monies all applications must be 
accompanied by payment in full for the total number 
of Shares applied for at the offer Price.
Cheques must be drawn on a registered  
New Zealand bank, must be crossed “Not transferable” 
and should be made payable to “Xero Share offer”.
application monies will be banked upon receipt 
into a designated bank account and held on trust 
pending the allocation of Shares. the banking of such 
monies does not constitute confirmation of the 
allocation of any Shares to the successful applicants.
applicants should ensure that sufficient funds are 
held in the relevant account to cover the cheque which 
accompanies their completed application Form. 
allocations of Shares will be made on the assumption 
that an applicant’s cheque will clear. If an applicant 
fails to make payment for the Shares under the 
Share offer, or an applicant’s cheque fails to clear, 
then the allocation of Shares to that applicant may 
be cancelled.
Where and When to Lodge Applications 
applications must be received by Link Market Services 
Limited, Po Box 91976 auckland 1142 (Level 12, 120 
albert Street, auckland) by 5.00pm on 30 May 2007.
applications through the Lead Broker and other 
Primary Market Participants must be lodged with the 
Lead Broker or other Primary Market Participant, in 
sufficient time to reach Link Market Services by no 
later than 5.00pm on 30 May 2007.
Xero may elect to close the Share offer early, or 
extend the Share offer, or accept late applications 
either generally or in particular cases. the Share offer 
may be closed at any earlier date and time, without 
further notice. applicants are, therefore, encouraged 
to submit their applications as early as possible.
Allocation Policy the allocation of Shares to 
applicants will be at the discretion of Xero. Xero may, 
at its discretion, reject any application (in whole or 
part) without giving any reason.
Notification of Allocations applicants should 
ascertain whether Shares have been allocated to them 
under this Share offer before trading in the Shares. 
applicants will be able to do so from 9.00am on 5 June 
2007 by calling the Share registrar, Link Market 
Services, on (09) 375 5998. applicants will also be able 
to confirm their allocation (if any), through the 
Primary Market Participant from which they sought or 
received their allocation of Shares.
applicants will be sent notices of allocation on  
5 June 2007.  any refunds for unsuccessful applications 
for Shares will be posted no later than  
8 June 2007. 
an applicant does not have any interest in, or right 
to entitlement to, any Share under this Share offer 
unless and until, and then only to the extent that, 
Shares are allotted to that applicant by Xero.
If you sell Shares before receiving an initial 
allotment notice, you do so at your own risk, even 
if you obtained details of your holding through the 
Share registrar or confirmed your allocation through 
a Primary Market Participant or otherwise. Neither 
Xero nor any of its directors, officers, employees, 
thIS IS aN IMPortaNt doCUMeNt. IF yoU are IN aNy doUBt aS to hoW to 
deaL WIth thIS oFFer doCUMeNt, PLeaSe IMMedIateLy CoNtaCt a PrIMary 
MarKet PartICIPaNt, aN aCCoUNtaNt, or a FINaNCIaL advISer.
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consultants, agents, partners or advisers accepts  
any liability or responsibility should any person 
attempt to sell or otherwise deal with Shares before 
the allotment notice showing the number of Shares 
issued to the applicant is received by the applicant  
for those Shares.
Refunds Money received in respect of applications that 
are declined in whole or in part will be refunded in 
whole or in part (as the case may be) without interest.  
refunds for unsuccessful applications will be posted 
within five days after the allotment date of the Shares.
Selling Shares on the NZSX Xero will not issue Share 
certificates to successful applicants. Xero will instead 
participate in the FaSter system. FaSter is a 
comprehensive system for recording and completing 
the transfer of securities listed on the NZSX. FaSter 
provides for paperless settlement and full electronic 
transfer of securities.
brokerage No brokerage or commission is payable 
by applicants for Shares issued to them under the 
Share offer.
Xero will pay a fixed brokerage fee of $240,000 to 
First NZ Capital Securities Limited. No brokerage will 
be paid by Xero other than the brokerage fee payable 
to First NZ Capital Securities Limited.
In addition, First NZ Capital Securities Limited will 
receive a management fee of $100,000 in respect of 
the Share offer by way of the issue of Shares by Xero 
under the Share offer. First NZ Capital Securities 
Limited does not guarantee or undertake any liability 
in respect of the Shares.
new zealand exchange listing application has 
been made to NZX for permission to list the Shares, 
and all the requirements of NZX relating thereto that 
can be complied with on or before the date of this 
offer document have been duly complied with. 
however, NZX accepts no responsibility for any 
statement in this offer document. Initial quotation of 
the Shares is expected to occur on 5 June 2007. NZX 
has authorised Primary Market Participants to act on 
the Share offer.
overseas investors the Share offer is only being 
made to members of the public in New Zealand. No 
person may offer, invite, sell or deliver any Shares or 
distribute any documents (including this offer 
document) to any person outside New Zealand.
Unless otherwise agreed with Xero, any person or 
entity applying for Shares in the Share offer will, by 
virtue of such application, be deemed to represent 
that he, she or it is not in a jurisdiction that does not 
permit the making of the Share offer or an invitation 
of the kind contained in this offer document and is 
not acting for the account or benefit of a person 
within such a jurisdiction. Neither Xero nor any of its 
directors, officers, employees, consultants, agents, 
partners or advisers accepts any liability or 
responsibility to determine whether a person is able to 
participate in the Share offer.
important document If you are in any doubt as  
to how to deal with this Offer Document, please 
immediately contact a Primary Market Participant, 
an accountant, or a financial adviser.

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xero is accessible any time through 
any internet connection in the world. 
xero’s login is secure and all data is 
automatically backed up.
connected
2
sectIon 2
Xero’S MarKet 
oPPortUNIty 
& CoMPetItIve 
PoSItIoNINg
“It IS treMeNdoUS to  
See a NeW ZeaLaNd 
CoMPaNy SUCh aS Xero 
BUILdINg a BUSINeSS oN 
NeW ZeaLaNd CreatIvIty 
aNd INgeNUIty, aNd  
WIth a BIg aSPIratIoN –  
to BeCoMe a  
‘MULtI-NatIoNaL’ ” 
chrIs lIddell 
cfo – mIcrosoft
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developments in technology innovation 
there are few industries where the dynamics change 
as quickly and as often as in the ICt industry. In the 
space of around 20 years, the ICt industry has moved 
from expensive mainframe computing, to mini 
computers, to PC’s, to the Internet.  Software has 
migrated from central computing, to client server to 
now starting to become web-based. 
each major shift provides opportunities for those 
who identify the trends and deliver products to the 
market early. Xero should have an early mover 
advantage in the provision of Internet-based 
accounting systems if it moves now.
the software as a service model (“SaaS”) that  
Xero has adopted provides an innovative means of 
supplying software to a large fragmented market.  
It is a model that is validated by international 
companies such as Salesforce.com with its customer 
relationship management (“CrM”) software, 37signals 
with its project coordination tool called Basecamp, 
and by Concur with its travel and expense 
management software.
at the same time, the distributive power of the 
Internet has enabled global brands to develop in the 
consumer technology space that have attracted 
strong customer support.  MySpace (social 
networking), youtube (video sharing), Skype (social 
networking, including voIP) and Flickr (photo sharing), 
all demonstrate how a large customer base can be 
developed at a low cost over the Internet through 
accelerated online and word of mouth marketing. the 
network effects of “group forming networks” and 
“user generated content” have seen rapid growth of 
simple applications over the Internet. 
the directors believe that the software needs of SMes 
are now moving closer to consumer software, and 
away from the traditional enterprise software and the 
existing SMe technology products generally available 
today. Consumer software requirements are simple – 
they are mass market by nature, have low 
customisation, are easy to implement, easy to use, 
easy to learn, easy to try and easy to buy.  Xero believes 
that SMes don’t want to be concerned with technical 
issues such as backups, upgrades and configuration. 
Based on the observation of these trends, the 
directors believe Xero’s SaaS business model is 
appropriate for, and will be attractive to, SMes.
this belief is supported by the findings of gartner 
Inc. (a leading international technology research 
company). gartner Inc. estimates that the SaaS market 
represented approximately 5% of business software in 
2005, but by 2011, around 25% of new business 
software will be delivered through the SaaS model. 
gartner Inc. further estimates that while the 
worldwide SaaS market had reached US$6.3 billion in 
value in 2006, it is forecast to grow to US$19.3 billion 
by the end of 2011.2 
Prior experiences in both consumer technology 
and the enterprise software sectors by various 
members of Xero’s management team have enabled 
Xero to tailor its product for SMes.
xero’s significant online accounting market 
opportunity Xero represents an opportunity to 
invest in a company that intends to target selected 
international SMe markets. SMes are the most 
common form of business organisation. In oeCd 
countries, they constitute over 90% of all businesses 
by number.3
Unlike many other software systems, which are largely 
optional, accounting systems are almost a necessity 
for SMes. accounting systems should assist in making 
key business decisions and reducing the burden of 
administrative compliance. 
Xero’s initial strategic focus will be on three 
countries – New Zealand, the UK and australia. It is 
estimated that the number of SMes in these regions is 
around 5.8 million, split as follows: UK, 4.3 million4; 
australia, 1.2 million5; and New Zealand, 322,000.6 In 
each case, Xero’s initial focus will be on key market 
segments which it believes, through its research and 
experience to date, are likely to be early adopters of its 
offering: technology companies, professional services 
firms (including accounting practices) and not-for-
profit organisations.
In New Zealand the adoption of the Internet is 
gaining traction. In March 2007, around 1.9 million 
New Zealanders aged 15 or older used the Internet, 
viewing around 3.6 billion pages of content. the 
average Internet user went online every other day and 
spent a total of 20.4 hours online during the month.7 
Xero commissioned ernst & young to undertake 
research into the finance and accounting systems 
market in New Zealand. Based on Xero’s knowledge, 
its own research and analysis, and the results of ernst 
& young’s research, Xero believes that the value of the 
market for finance and accounting systems by 
businesses in New Zealand with less than 100 
employees is worth at least $260 million per annum. 
Xero also estimates that between 10% and 30% of 
such businesses do not currently have access to 
accounting systems. this equates to a market 
potentially worth up to $90 million.
2   source: news release by gartner inc., 3 october 2006.   3   source: oecd sme and entrepreneurship outlook – 2005 edition.   4   source: uk department of trade & industry, news release, 31 august 2006. the definition of smes in the uk refers to organisations 
with less than 50 employees. xero’s definition of smes for the new zealand and australian markets refers to organisations with less than 20 employees.   5   source: sme business forum 2007, australia.   6   source: nz ministry of economic development report 
– smes in new zealand: structure and dynamics, may 2006.   7   source: press release by comscore, 26 april 2007.  
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there are estimated to be three times as many SMes in 
australia and over 13 times as many in the UK, as in 
New Zealand. the directors therefore believe that 
there is a significant market opportunity in these 
targeted markets. this belief is supported by the size of 
some of the larger competitors that address the 
accounting software market.
competitive landscape the market for accounting 
systems for the SMe market is large, but fragmented.
Whilst there are established providers of 
traditional accounting software packages in Xero’s 
target markets, the directors are not aware that any 
of the larger competitors to Xero have completely 
adopted a SaaS model. the directors believe that the 
products offered by Xero’s most likely potential 
competitors are predominantly focused on traditional 
methods of software delivery encompassing an up-
front licence fee, software upgrades and ongoing 
maintenance and services charges. SaaS is a 
fundamental shift from how software is traditionally 
delivered; it requires new technology architectures 
and the nature of customer relationships are different. 
the directors believe that larger competitors are 
not as well placed to completely change their business 
models to the SaaS model which Xero offers. If so, this 
situation provides a good opportunity for Xero as a 
fast moving, unencumbered new entrant, operating 
from a low cost of sale environment to firmly establish 
itself in the marketplace.
the leading providers of accounting software 
packages tend to be large international companies, 
including MyoB (in australia), Sage (in the UK) and 
Intuit (in the USa). these companies are listed on 
stock exchanges in their respective countries. Some of 
their financial metrics are as follows:
Some further information on MyoB, Sage and  
Intuit follows9:
MYOB – founded in 1991, MyoB is listed on the 
australian Stock exchange. It has operations in nine 
countries, including australia, New Zealand, asia and 
the UK. MyoB’s historic focus has been on offering 
accounting packages to businesses with less than 20 
staff, but it has recently been expanding into the 
medium segment, targeting businesses employing 
between 20 and 200 staff. 
MyoB’s client base includes more than 500,000 
businesses. MyoB’s acquisition, in 2004, of Solution 6, 
boosted its offering to include practice management 
software that is used by over 10,000 accounting firms.
MyoB has established MyoB ondemand, which is 
the exclusive australasian distributor of the NetSuite, Inc. 
(“NetSuite”) range of online business applications. 
NetSuite is a USa based company providing hosted 
business management systems and has more than 
9,000 customers worldwide. NetSuite’s applications 
include accounting, enterprise resource planning (“erP”), 
CrM and eCommerce solutions. the investors in MyoB 
ondemand include MyoB and some third parties.
MyoB has adopted a strategy that includes growth by 
acquisition and since 2000 has completed 10 acquisitions.
Sage – founded in 1981, Sage is listed on the London 
Stock exchange, forming part of the FtSe 100. 
originally focused on the UK market, Sage has 
replicated its model in a number of markets around 
the world, including New Zealand and australia. 
Sage’s product portfolio was initially focused on 
accounting software but as the business has grown, it 
has increased the scope of its offering to encompass 
other business solutions such as payroll, human 
resources, customer relationship management 
(“CrM”), merchant services and medical practice 
management software and services. Sage’s main 
focus is on the small and mid-market business 
software market, with companies that employ less 
than 100 staff, although it also has offerings for larger 
businesses. It has grown its customer base from 
around one million customers in 1998 to over five 
million customers in 2006.
metrics of leading accounting software providers
	
Market	capitalisation	
	
Annual	revenue	recorded	
Company	
as	at	1	May	2007	
Balance	date	
from	last	full	year	accounts8
MyoB 
a$473 million 
31 december 2006 
a$182.3m
Sage 
£3.4 billion 
30 September 2006 
£935.6 million
Intuit 
US$9.7 billion 
31 July 2006 
US$2.3 billion
the software as a servIce model that 
xero has adopted provIdes an InnovatIve 
means of supplyIng solutIons to a large 
fragmented market.
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the directors understand that Sage has released an 
online product, which is a hosted version of a Sage 
desktop product. this is accessed using Citrix software 
installed on the customer’s computer and therefore 
this offering does not completely adopt a SaaS model.
Sage has adopted an acquisition strategy to 
expand its business outside the UK and has acquired 
16 businesses in the last five years. 
Intuit – founded in 1983, Intuit is listed on NaSdaQ. 
It has offices in the USa, Canada, the UK, India and 
other locations. Intuit’s offering includes the provision 
of business and financial management solutions for 
SMes, financial institutions (including banks and credit 
unions), consumers and accounting professionals.  
Its products and services include QuickBooks, Quicken 
and turbotax software. there is an online version  
of the QuickBooks product. the directors understand 
that the software is installed on the customer’s 
computer and requires Microsoft Windows, Internet 
explorer and an activeX component download.
Intuit has over 17 million customers worldwide.  
In New Zealand and australia, Intuit’s products are 
distributed by an australian company, reckon Limited. 
these products include Quicken, which is targeted at 
personal use customers and QuickBooks, which is 
Intuit’s product for SMes.
Intuit Inc. has made 14 significant acquisitions 
since 2000.
there are many other companies already providing 
a range of accounting software products in  
New Zealand, the UK and australia. however, many 
of these companies have legacy products with small 
installed customer bases. 
examples of private companies in New Zealand 
offering products to the marketplace include BankLink 
Limited, MoneyWorks NZ Limited and Plusfactor 
Solutions Limited.
the directors are also aware that there are many 
other companies who could potentially compete with 
Xero in the SMe market. For example, SaP, oracle and 
Microsoft also offer accounting software packages to 
the international marketplace. however, the directors 
understand that the core focus of these companies is 
predominantly on businesses with more than 50 
employees, although Microsoft already has an 
offering tailored to the SMe market in the USa. 
additionally, Xero may face competition from 
competitors of which the directors are not currently 
aware, or from new competitors in the future.
the potential response of any of Xero’s competitors 
to Xero’s online offering is unknown and may impact 
on Xero’s business and growth prospects.
xero’s competitive positioning the SaaS model 
adopted by Xero is a fundamental change from the 
existing providers of accounting software 
applications. this creates a good opportunity for Xero, 
as a fast moving, new entrant unencumbered with 
legacy applications and business models.
the directors believe that Xero can create a strong 
market position for itself in the online accounting 
software sector if it captures the opportunity that 
currently exists. Xero has already recruited an 
experienced team, has a compelling business model,  
a product available for full market release in the 
second half of 2007, a developing brand and some 
key business relationships to help it succeed.
however, it needs to move quickly with an 
appropriate level of capital to establish its business 
in New Zealand and then credibly enter its targeted 
overseas markets. 
In the markets that Xero proposes to target, 
the directors believe that Xero will be the first public 
company completely focused on a web based, SaaS 
offering for SMe accounting. 
8   source: annual reports from each of myob, sage and intuit, based on their respective accounting policies. these may not be comparable 
to the accounting policies of xero.   9   information on myob, sage and intuit has primarily been sourced from their respective websites.
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xero has been designed from the ground up 
with customers and their advisers in mind. 
it’s intuitive and it’s built to perform.
sImplIcIty
2
accounting for success Xero provides an online 
accounting system that provides SMes with a clear 
picture of the money that flows in and out of their 
businesses, helping them maintain an accurate 
picture of their financial situation at all times via the 
Internet. Using Xero, SMes can import their bank 
transaction information, which saves significant time 
and moves SMes into real time accounting. as with 
online banking, Xero can be accessed through the 
Internet anywhere at any time. 
Xero’s product has been designed to output screen 
sized pages and work acceptably on broadband, dial 
up and mobile data speeds.
the Xero system currently includes features such as 
bank transaction importing, a cashbook, a general 
ledger, invoicing, accounts receivable, accounts payable, 
gSt, financial reporting and management of expense 
claims. the system is currently targeted at businesses 
and organisations with less than 20 employees but, in 
due course, is intended to be able to support enterprises 
with up to 50 and more employees.
there is an active roadmap of new features and 
product enhancements to be developed and released.
Since November 2006, Xero initiated a pre-release 
phase with 140 live users to ensure that, as each 
feature of the software was completed, it met the 
requirements of SMes. Upon successful completion of 
this pre-release phase, Xero has admitted more than 
100 paying customers since 1 april 2007 as part of a 
limited release while it builds further operational 
capability. Further paying customers will be accepted 
during the next few months. It is expected that 
sufficient operational capability, including sales, 
marketing and customer support, will be in place in 
august 2007 to enable an unconstrained formal 
launch of the product in New Zealand.
With minimal marketing to date, Xero has developed 
a pipeline of potential customers and confirmed the 
operational capability of, and the demand for, the 
Xero product.
xero’s product the pictures overleaf provide an 
illustration of Xero’s product. 
key benefits of xero’s product offering  
Xero’s accounting system is different to most installed 
SMe accounting systems currently available in the 
marketplace in the following important ways:
• It is easy to use – limited training is required and 
the product is customer friendly. It is also built to 
save the SMe time so it can spend more time 
managing and running its business and less time 
on accounting matters.
• It is available online – there is no software to 
install. as with online banking, Xero is accessible 
any time through any Internet connection in the 
world. Xero’s login is secure, it is insulated from 
viruses and spyware and all data is automatically 
backed up. 
• It is cost effective – a pay as you go and pay as you 
grow pricing model. It is comparatively inexpensive, 
requires no server, no backups, minimal training, low 
cost support, no data transfer delays or 
synchronisation issues, and provides automatic 
software upgrades for customers.
• It maximises access to advisers – enables an SMe 
to easily share information with its advisers. an 
SMe’s bookkeeper, accountant, and other advisers 
can access information any time, anywhere to help 
provide real time advice.
sectIon 3
aBoUt 
Xero
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• It assists decision making – provides immediate 
visibility of important information (such as real 
time cash flow information) for SMes to run their 
businesses and make informed decisions.
• Continuous innovation – Xero can continually 
innovate its software product and be driven by 
customer requirements and competitor 
movements. Innovations can be built into the 
system without having to rollout an upgrade or 
installation to users and without disrupting the 
customer’s use of the system.
• It is easy to switch to Xero – there should be 
minimal cost for an SMe to switch to Xero from 
another accounting system.
overall, Xero should improve an SMe’s business by 
assisting with the quality and timeliness of 
information and by providing best practice guidelines.
For accountants, Xero allows greater efficiency so 
the adviser can handle more customers and build the 
‘trusted adviser’ relationship, creating the opportunity 
to add value for its clients.
“the xero product wIll change the way 
chartered accountants work wIth theIr 
clIents – whether It’s technIcal assIstance 
or busIness advIce. usIng xero, chartered 
accountants wIll have access to tImely and 
relevant InformatIon upon whIch they can 
buIld a relatIonshIp based around value to 
theIr clIents rather than beIng glorIfIed 
number crunchers.”
robert cross 
dIrector – ‘bIg four’ accountIng fIrm
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xero’s organisation structure as at 30 april 
2007, Xero employed 27 staff (including its 
Founders and executive directors, rod drury and 
hamish edwards). 
as a company whose business is based on 
intellectual property, human capital is Xero’s most 
important asset. having owned and managed a 
number of successful businesses, the Founders of  
Xero have broader objectives than creating a team  
to build a successful business. these include:
• a desire to create a sustainable and international 
business operating from New Zealand.
• Investing up front in the management team to 
create the foundations for pursuing international 
success.
• Providing New Zealand’s best It professionals with 
an opportunity to work in an international business 
based in New Zealand, as well as attracting new 
international talent – Xero can become an example 
of what New Zealand could offer as a centre of 
It excellence.
With a track record for success, the founders have 
managed to attract excellent talent, both from 
New Zealand and overseas.
Xero has established a UK advisory Board of senior 
UK executives to assist with Xero’s market entry 
strategy into the UK market. they are not directors 
of Xero.
xero’s business model Xero’s adoption of the SaaS 
model provides a cost effective way to deliver an 
accounting system that is focused on the SMe market, 
is robust, is internationally scaleable and offers ongoing 
customer support. the SaaS model is becoming 
recognised internationally as a method of supplying 
otherwise expensive technology solutions to SMes. 
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SaaS suits the frequent legislative changes common  
in business environments. Such changes are a 
major issue currently on the agenda for businesses  
in australia.
US-based salesforce.com, Inc. is perhaps the best-
known international example of the SaaS model. 
It allows users to access its sales force automation 
software product in return for a fixed monthly fee. 
salesforce.com, Inc. was founded in 1999 and is listed  
on the New york Stock exchange. Its business model 
has helped it grow quickly; for the year ending  
31 January 2007 it recorded revenues of $US497  
million (an increase of over 60% from the previous 
corresponding period)10 and as at 1 May it had a 
market capitalisation of $US4.7 billion. While Xero’s 
offering is focused on online accounting software, 
rather than sales force automation software, the 
business models are similar.
one of the advantages of the SaaS model i</p>