Xero has raised £90 million for its online accounting software which is aimed at small and medium sized businesses (SMBs).

The funding for the cloud-based software, announced today, came from a number of investors including Matrix Capital Management and Valar Ventures, which is backed by Paypal co-founder Peter Thiel.

Xero claims that the unique selling point of its software, which is used by 211,000 customers globally, is the simplified user interface and the fact that it offers many of the services that SMBs are now looking for, such as integration with payment services like Paypal and the ability to add CRM apps. 

The New Zealand based start-up said the latest round of funding will help it to compete with more established companies, such as Sage and Intuit, while also helping to accelerate its UK expansion.

David Goel, managing member of Matrix Capital Management, said: “Xero is emerging as the definitive software platform for small business worldwide.

“Having empowered hundreds of thousands of small and medium-sized businesses in New Zealand, Australia, and the United Kingdom, Xero is poised to do the same for its 29 million potential customers in the United States. We are adding to our investment to help facilitate and accelerate this goal.”

The company opened its second UK office in London last month and announced it had more than 30,000 UK businesses on its books, with 1,200 UK accounting and bookkeeping practices also using its cloud technology.

A Censuswide survey commissioned by Xero in September 2013 found a surge in uptake of cloud technology, with 55 percent of UK accounting practices either having already switched or planning to switch to the cloud to cut costs and improve practice efficiencies.

Gary Turner, managing director at Xero UK said: "The migration to the cloud by UK businesses and their accountants is accelerating. In the last 12 months we have seen the number of British businesses using Xero double to 30,000 and over the same period more than £8 billion worth of business was conducted on Xero's cloud platform by Xero customers in the UK. These trends are very encouraging and signal that the time is right accelerate investment."

Xero received £30 million in funding less than a year ago from Valar, Matrix and others.