Australia's Square Peg raises $180m for debut VC fund

The vehicle has superannuation fund backing in the form of Hostplus, which is said to have contributed A$50 million. Other commitments came from high net worth individuals and technology sector entrepreneurs. The fund will invest in start-ups in Australia, Southeast Asia and Israel.

"We are really happy with the size of the fund, and we think it gives us good firepower to have a nice spread of investments," Bassat told The Australian Financial Review, in a story linked from Square Peg’s Twitter account. “We don't see raising a fund as an achievement in itself, but it obviously gives us capacity to back some great founders and deliver great returns for our investors."

Bassat established the firm in 2012 with Barry Bott, previously an early-stage investor for Jagen, a Melbourne-based family office. Square Peg started out by making investments outside of a formal fund structure, backing the likes of Uber and Stripe in the US, as well as PropertyGuru in Southeast Asia, and Canva and Rokt in Australia.

There has been one full exit, with ShippingEasy, a cloud-based platform that gives users access to discounted shipping rates and makes it easier to print labels, process orders and automate tracking, sold to Stamps.com for $55 million last year.

Australia’s start-up ecosystem has seen a surge in activity at all levels in recent years, from seed funding through institutional venture capital. Between 2012 and 2016, VC investment came to $1.4 billion, up 63% on the previous five years, according to AVCJ Research. Meanwhile, in 2016 alone, venture fundraising reached a record high of $788 million.

Square Peg joins Blackbird Ventures and AirTree Ventures as part of a new generation of entrepreneur-founded VC firms that have received superannuation capital. Blackbird closed its second fund at A$200 million in 2015 with commitments from First State Super and Hostplus, while AirTree’s A$250 million fundraise last year was supported by two super funds. Unlike Square Peg, both funds have a dual tranche structure: a main early-stage vehicle and an opportunity fund for follow-on investments.

Hostplus alone has allocated A$350 million to domestic venture capital in the past five years, backing vehicles raised by M.H. Carnegie & Co. and Brandon Capital, as well as Blackbird and Square Peg. Last month it committed A$85 million to local seed investor Artesian, taking the venture capital firm’s funds under management to more than A$150 million.

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• Topics
• Australasia
• Venture
• Fundraising
• GPs
• Technology
• Australia
• Venture
• Square Peg Capital
• TMT
• HOSTPLUS