Australia's Square Peg confirms $237m close for Fund II
Australia’s Square Peg Capital has secured two new superannuation fund backers for its second fund, which has closed at A$340 million ($237 million).
The new investors joined Hostplus, which contributed to Square Peg’s A$234 million debut fund in 2017 and re-upped for the new vehicle. Increased participation from superannuation investors is considered a critical missing ingredient in an expected expansion in Australian VC fundraising.
“For us, nothing has really changed. Every day we're still debating businesses, meeting entrepreneurs, forming views about whether or not it makes sense for us to get into a relationship with them,” Paul Bassat, co-founder of Square Peg, told The Australian Financial Review. “But if you put yourself in the perspective of our investors ... obviously, they had to have a degree of confidence to back us and they probably put more value on the last 12 weeks than we do.”
Fund II closed in December last year, but Square Peg withheld confirmation amid a string of activity in recent months. This has included a re-up in financial technology provider Airwallex that established it as Australia’s newest unicorn in March, as well as a A$110 million IPO for local small business lender Prospa earlier this month. Prospa initially listed shares in mid-2018, but postponed trading indefinitely only 15 minutes before its scheduled float in light of a regulatory review.
AVCJ understands that Fund II will follow the same sector and geography-agnostic strategy as its predecessor. This includes a focus on Series A and B rounds, as well as opportunities where Square Peg can lead rounds and nominate board members. Outside of Australasia, key geographies include Southeast Asia, Israel, and the US.
In addition to rising interest from superannuation funds, Australian VC fundraising has been increasingly supported in recent years by government initiatives, corporate VC plays, and an emerging ecosystem of homegrown tech corporates such as Seek, Atlassian, Campaign Monitor, and Atlassian. Venture debt fundraising has also been a recent theme, with local investment firm Leap Capital raising A$50 million for a venture debt fund earlier this month.
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