Fund focus: Square Peg goes formal with $180 fund

The first four years of Square Peg Capital’s existence were spent backing start-ups on a deal-by-deal basis, working in conjunction with high net worth individuals (HNWIs) and family offices. It relied largely on the resources and networks of co-founders Paul Basset, who previously set up job listings site Seek, and Barry Bott, formerly an early-stage investor for a family office.

The Australia-based firm’s first formal venture fund is the product of rising LP demand. Domestic superannuation fund Hostplus contributed $50 million and further commitments came from HNWIs, entrepreneurs and family offices as Square Peg raced past its $150 million target to close at $180 million. Total assets under management now stand at $300 million.  

“We have a wide network of high net worth LPs whose capital we have been investing prior to this fund, and many of them have now invested in the fund. We have also added several new family offices and HNWIs as LPs alongside institutional investors like Hostplus,” says Tushar Roy, a partner at Square Peg.

The bulk of capital still comes from family offices and individuals, including tech entrepreneurs, which may explain why Square Peg hasn’t felt the need to create separate early-stage and follow-on vehicles like fellow Australia VCs Blackbird Ventures and AirTree Ventures. The firm also differs from its counterparts in seeking opportunities in Southeast Asia and Israel as well as Australia. 

“We believe venture is a global asset class, and great venture opportunities can arise anywhere,” Roy says. “We’re looking at three main geographies where we are advantaged from our knowledge, experience and network to find the best deals. As we’re looking at different markets, the bar is very high for us to make investments. We are comparing start-ups not just in the Australian context, but with start-ups we see in the US, Israel, and Southeast Asia.”

Square Peg’s deal-by-deal investments include Uber and Stripe in the US, as well as PropertyGuru in Southeast Asia, and Canva and Rokt in Australia. While online marketplaces are a common theme across all geographies, the GP will also look at specific segments in certain areas: software-as-a-service (SaaS) in Australia, deep learning technology in Israel and consumer internet in Southeast Asia. 

“Series A and B are our sweet spots, but we have the capacity and ability to go earlier and later. In Square Peg’s early years we made a lot of seed investments. We will continue to do that but in the last few years we have also done some large growth rounds,” Roy says.

To emphasize the variety, he points to Fiverr in Israel, where Square Peg provided more than half of the $60 million raised, and PropertyGuru, where the firm joined TPG Capital and others in a $129 million round. “We can use co-investment as a way to do larger rounds,” Roy adds. “We expect to bring Hostplus and other LPs further into these opportunities.”

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