Australia’s Square Peg raises $240m for third VC fund
Australian VC firm Square Peg Capital has received initial commitments of A$350 million ($240 million) for its third fund from investors including Hostplus and AustralianSuper.
This is AustralianSuper’s first commitment to Square Peg and its third VC relationship in Australia, following healthcare-focused Brandon Capital and tech generalist AirTree Ventures. Hostplus, which is recognized as the most aggressive superannuation investor in the local VC space, is also an LP in Square Peg’s first two funds.
Increased participation from Australian pension investors is considered a critical missing ingredient in an expected expansion in local VC fundraising. According to Square Peg co-founder Paul Bassat, discussions with family offices have been put on hold during COVID-19 but engagement with the superannuation funds was never disrupted.
"It says more about AustralianSuper and Hostplus than it does about us,” Bassat told The Australian Financial Review. “They're high integrity partners and when they say they'll do something, they'll do it.”
Square Peg has not disclosed its target for the new fund, but the latest commitments are said to have positioned the investor as the best capitalized VC in Australia with more than A$1 billion under management. The firm closed its second fund at A$340 million last year with two super funds as LPs, including Hostplus. Its debut raised A$234 million, exceeding a A$200 million target in 2017.
Square Peg invests with a sector and geography-agnostic strategy that includes a focus on Series A and B rounds, as well as opportunities where the firm can lead rounds and nominate board members. Outside of Australasia, key geographies include Southeast Asia, Israel, and the US.
Bassat, who is the co-founder of job listings site Seek, established the firm in 2012 alongside Barry Bott, previously an early-stage investor for Jagen, a Melbourne-based family office. Early investments were made outside of a formal fund structure and included Uber in the US. Standout portfolio companies currently include Canva, an Australian graphic design start-up that raised $85 million last year at a valuation of $3.2 billion.
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