Tech billionaire and early Facebook investor Peter Thiel has trimmed his stake in New Zealand software developer Xero.

The Paypal co-founder's shareholding has fallen to 5.7 per cent from 6.7 per cent following the on-market sale of 765,171 shares for $15.3 million, according to a substantial security holder notice lodged with the NZX.

Thiel first invested in Xero in 2010 when he pumped $4 million into the accounting software provider to support its expansion into the United States.

A number of larger additional investments resulted in him becoming one of the company's biggest shareholders.

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Xero chief executive Rod Drury remains the company's largest shareholder, with a 15.2 per cent stake.

Thiel has been making headlines recently after bankrolling Hulk Hogan's successful lawsuit against Gawker Media for invasion of privacy after it published a sex tape.

He endorsed presidential nominee Donald Trump at the Republican National Convention in July.

Xero shares, which have gained 46 per cent over the past year, opened at $20.20 this morning.