From PayPal roots to global exit: Inside Melio’s $3B sale to Xero

In one of the largest tech exits in Israeli history, Melio has been acquired by New Zealand-based software giant Xero in a deal worth up to $3 billion. The acquisition, which was delayed due to recent hostilities with Iran, marks a significant moment for Israel's high-tech sector as it rebounds from months of geopolitical uncertainty.

Under the terms of the deal, Melio shareholders will receive $2.5 billion upfront, mostly in cash, with an additional $500 million in contingent payments over three years, primarily aimed at retaining Melio’s 600 employees. The company offers a platform that enables U.S. small businesses to pay their suppliers more efficiently.

Big Winners: Founders, Early VCs, and Surprise Angels

The biggest beneficiaries of the exit are Melio’s co-founders - Matan Bar, Ziv Paz (who left the company in 2021), and Ilan Atias, each set to earn between $150–200 million. Despite raising $650 million over seven rounds, the founders retained about 9% of the company.

Before founding Melio, Bar was a senior executive at PayPal, where he gained significant experience in company building and navigating the U.S. market. The company was born out of the founders' realization that supplier payments in the U.S. were still largely conducted via paper checks.

Early investors Bessemer Venture Partners (18%) and Aleph (12%) will see returns of nearly $500 million and $300 million, respectively, after backing nearly every round.

Surprise winners include Micha Kaufman, CEO of Fiverr, who was an angel investor, and Yan Piskunov, former Jewish Congress trustee, who acquired a small stake in a secondary deal.

The Losers: Global VC Giants

Ironically, the major global venture capital firms that led Melio's growth, General Catalyst, Coatue, and Thrive Capital, are expected to see minimal returns, due to Melio’s $4 billion peak valuation in 2021. While not losing money, they are unlikely to post meaningful gains.

Melio’s value soared during the pandemic, when it became essential for small businesses moving away from paper checks. In 2021, the company raised $250 million at a $4 billion valuation. By then, it had scaled from processing $20 million monthly to $1 billion per month, with headcount jumping from 30 to 420 across Israel, New York, and Denver.

But growth stalled in the post-COVID slowdown. The company laid off staff, shut its Denver office, and couldn’t maintain its sky-high valuation. In 2025, it reports an annualized revenue run rate of approximately $150 million.

Xero’s Strategic Move into the U.S.

Xero, publicly traded on the Australian Securities Exchange with a market cap of about $20 billion, offers cloud-based accounting software for SMBs globally. Its 2024 revenue reached $1.23 billion.

The acquisition, structured through $1.2 billion in institutional fundraising, a $360 million share issuance, a $400 million credit line, and $600 million in cash reserves, will give Xero a stronger foothold in the critical U.S. market.

Melio will help Xero integrate advanced payments capabilities into its platform, streamlining workflows for small businesses and accountants alike. The move supports Xero’s “3x3 strategy” to scale core services in Australia, the UK, and the U.S. Melio’s impressive 127% compound annual growth rate over the last four years makes it a powerful growth asset.