Australia’s Square Peg raises $550m across two VC funds

At least USD 450m of the amount raised is for Fund IV, according to AVCJ Research. The follow-on fund appears to be Square Peg’s first, although it has been styled as Opportunities Fund 2. Internally, the firm refers to its early deal-by-deal activity via special purpose vehicles as Fund Zero.

LPs in Fund IV include Commonwealth Bank of Australia, Roc Partners, and superannuation funds Hostplus and AustralianSuper. Hostplus was Square Peg’s first institutional investor and is making its fourth fund commitment. Roc and AustralianSuper were investors in Fund III, which closed on AUD 600m (USD 389m) in late 2020.

Square Peg was founded in 2012 by Paul Bassat, co-founder of job listings site Seek; Barry Bott, previously an early-stage investor for Melbourne-based family office Jagen; Tony Holt, previously a tech specialist at Macquarie Bank, Citi Bank and Merrill Lynch; and Justin Liberman, who has 26 years of tech investment experience at Jagen.

Early investments were made using the founders’ own capital. A debut blind pool fund came in 2017 with AUD 340m in commitments, while Fund II closed AUD 340m in 2019. Capital commitments amount to over USD 1.6bn since inception. More than USD 580m has been returned to investors across 11 exits at an IRR of 42%.

Square Peg has invested in approximately 60 companies to date. Standouts include Australia-founded and US-based marketing tech provider Rokt, Australian design platform Canva, Hong Kong-based Airwallex, and US payments giant Stripe.

Rokt raised USD 325m last year at a valuation of USD 1.9bn, while Airwallex and Stripe are said to be worth USD 5.5bn and USD 95bn, respectively. Canva achieved a valuation of USD 40bn last year, but several investors have since disclosed sizeable markdowns. In July, Blackbird Ventures - like Square Peg, an early backer of the company - said it had revised the valuation to USD 25.6bn.

Unlike most of its domestic competitors, Square Peg’s strategy includes a strong focus beyond Australasia, including North America, Southeast Asia, and Israel. As much as one-third of the latest vintage will be deployed in Israel, according to Israeli media. There are offices in Sydney, Melbourne, Tel Aviv, and Singapore.

“Over the past decade, we have demonstrated that there are significant benefits to investing across multiple regions, which allows us to empower exceptional tech founders from a broader set of opportunities. The larger opportunity set also allows us to be highly thematic in our approach and obtain compounding benefits from our domain expertise,” Square Peg said in a statement.

The firm added that despite significant global economic uncertainty, the coming years represented an “incredibly attractive” time to invest. Early activity by Fund IV includes participation rounds for Singapore IT provider Supabase and US recruitment automation platform Kula.

In February, Fund IV took the lead in a USD 40m Series B for Cialfo, a Singapore-based education technology provider that helps Asian high school graduates access international universities. Its investors also include Seek and Tiger Global Management.

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• Topics
• Australasia
• Fundraising
• GPs
• Venture
• Australia
• Square Peg Capital
• HOSTPLUS
• AustralianSuper
• ROC Partners