Cloud accounting software provider Xero says it has raised $147.2 million from two US investors, which it will use to fuel innovation and growth, particularly in the United States and Britain.
The cash injection will increase the company's cash balance to about $285 million, Xero said.
Xero shares rose more than 18 per cent to $21.60 in early trading.
The company said Palo Alto-based venture capital firm Accel Partners has agreed to invest $132.9 million at $20 a share through a number of funds under its management.
Accel's total stake in Xero is expected to be around 4.9 per cent following the transaction.
Existing shareholder Matrix Capital Management, which is Xero's biggest institutional investor, will inject a further $14.3 million into the New Zealand technology business.
Chief executive Rod Drury said the firm's ability to attract capital "of this calibre" was testament to its success and potential to become "the small business SaaS [software-as-a-service] platform of choice for entrepreneurs around the globe".
Xero stock has been particularly volatile this month and the company received a "please explain" notice from sharemarket operator NZX last week following a spike in its share price.
In response, the company said it was in compliance with its continuous disclosure obligations.
Its shares rose 24 per cent between the close on Monday last week and an intra-day high of $20.40 on Monday this week.
Xero shares fell 8.7 per cent yesterday to close at $18.25.
Drury told BusinessDesk that last week's gain in the share price was unrelated to today's announcement.
"We're pretty confident it's not (related). We kept it super tight and we keep a good close eye on the register, so we're very careful about that," Drury said.
"What we did know was that some people speculated that we did have a large seller exit the market, and off the back of an awesome Xerocon event and lots of media we did see it go up, but then it came down again yesterday."
A market source said the capital raising should be triggering disclosure questions from regulators given last week's share price query.
"As is routine where a price enquiry has been issued, NZX will continue to monitor [Xero's] recent trading history, including the period up to today's announcement," said a spokeswoman for NZX, the frontline sharemarket regulator.
Accel partner Andrew Braccia said the company saw an opportunity for millions of small businesses to grow on Xero's platform.
"We've worked with several other leading companies in the region to broaden their global reach and we hope this experience will be valuable as Xero's strong leadership team looks to expand in the United States."
The Accel and Matrix investments are expected to close in the middle of next month.
The extra cash may be used for a possible US initial public offer, as well as further acquisitions of smaller software as a service businesses, Drury said.
"We didn't need to go and raise money, we had enough money for our plans, but we were able to price it at a premium," Drury said.
"It should just give investors, partners and customers a huge amount of confidence."
Meanwhile, Xero said it was continuing the expansion of its US and global leadership teams, appointing Russell Fujioka as US president. He will be based at Xero's San Francisco headquarters.
"Fujioka brings to Xero significant experience in sales, digital marketing and operational management of high growth technology businesses," the firm said.
The company has also appointed Graham Smith to its board as an independent, non-executive director.
"Smith brings significant experience scaling SaaS businesses and creating industry leaders from his time as Salesforce's chief financial officer and as a Board member of industry leaders such as Splunk," Xero said.
- with BusinessDesk