NetSuite, the Silicon Valley-based software maker backed by Larry Ellison, the chief executive of Oracle, hopes to raise as much as $100 million when it goes public later this week.

The company, which sells accounting software to mid-sized firms, aims to sell up to 6.2 million shares for between $13 and $16 in a Dutch auction, according to a report in The New York Times.

Netsuite, which was set up ten years ago by a former Oracle programmer, Evan Goldberg, is one of a number of firms embracing a new model for distributing software, known as 'on demand', where products and services are accessed via the web.

Customers pay a subscription - instead of a one-off licence fee - to providers, who host the software on their own servers. Customers therefore avoid the need to run costly information technology infrastructure of their own.

The model, which can be used to provide anything from accounting to sales management and delivery-related software, was made popular by Salesforce.com, which went public in 2004. More recently it has been embraced by Microsoft, which refers to the concept as 'cloud computing'.

Netsuite's products are designed for small to mid-sized firms, whose accounting needs have outgrown the capabilities of simple software but are not yet complicated enough to warrant investment in the larger programs offered by competitors such as SAP and Oracle.

The company, which has 600 employees, has yet to make a profit, but in the first nine months of 2007 revenues were $76.8 million (£37.8 million) - an increase of 68 per cent on the same period a year ago, and its losses fell from $26.9 million (£13.2 million) to $20.6 million (£10.1 million).

According to IDC, the research firm, sales of 'software as a service', as Netsuite's line of products is known, were about $3.7 billion (£1.8 billion) in 2006, and are expected to rise by 32 per cent each annually over the next few years.

The IPO, one of the most anticipated in Silicon Valley, will be by Dutch auction - the same method used by Google when it went public in 2004. Investors submit individual bids, but ultimately - assuming they are chosen - pay the same price as one another for their shares. The price is determined by the highest bid that ensures all the stock will be sold.

According to The New York Times, Netsuite's bankers - Credit Suisse Securities and W.R.Hambrecht &Co - started taking bids on December 10.

Netsuite has said it will initially use the cash it raises to pay back an $8 million (£3.9 million) loan from Mr Ellison's investment firm, Tako Ventures.

Mr Ellison, Netsuite's largest shareholder, with 74 per cent of the stock, is an advisor to Mr Goldberg, and to Zachary Nelson, the company's president and chief executive, who was formerly in charge of marketing at Oracle.

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