Australian VC Square Peg Capital raises $242m from pension funds

Sydney Opera House, Sydney, Australia. Photo: Holger Link/Unsplash

Australia’s largest pensions backed Square Peg Capital Pty’s latest funding round as the firm looks to boost investments in startups joining the wave of innovation sparked by the coronavirus.

AustralianSuper Pty and Host-Plus Pty were among investors in Square Peg’s A$350 million ($242 million) funding round targeting early-stage technology companies, the Melbourne-based firm said in an emailed statement Tuesday. The raise makes Square Peg Australia’s largest venture firm, with more than A$1 billion under management, it said.

The fresh funds will help Square Peg back firms that are tapping the massive changes brought on by Covid-19, from increased online shopping and education to shifts in healthcare and new work arrangements, said Square Peg co-founder and partner Paul Bassat.

“In the space of two months, we have seen the equivalent of a decade’s worth of change in the take-up of online business models,” he said in the statement. “Covid-19 is a catalyst for the acceleration of long-term trends that have existed for a long time.”

Bassat cited some of the companies that have thrived during the pandemic, such as U.S. software firms Slack Technologies Inc. and Zoom Video Communications Inc., and Canadian e-commerce firm Shopify Inc. Square Peg-backed Fiverr International Ltd. -– a freelance marketplace based in Israel — has seen its share price more than triple since it listed last year.

Square Peg’s raise signals investors still favor Australia’s venture capital industry despite heightened fears that investment from the nation’s A$2.73 trillion in retirement savings will slow amid the coronavirus-induced recession. Local venture firms raised almost A$4 billion in the past four years thanks to a flood of money from pension funds taking bets on early-stage companies.

The fresh capital will support Square Peg’s fourth fund and to fund opportunities it’s already spotted from earlier financing. The firm has invested in tech-unicorns Canva Pty. and cross-boarder financing firm Airwallex Pty. The fund, created in 2012, is targeting companies in Australia as well as Israel and Southeast Asia.

Having cash on hand allows Australia’s largest venture firm to fund investments with more favorable terms as the virus-induced market rout lowers private valuations. Previous downturns have bred unicorns including Aconex Ltd., Atlassian Corp. and Culture Amp Pty.

Funds that managed to raise capital in the wake of the global financial crisis outperformed their peers by about 34% in the following five years, Tempus Partners founder and managing director Alister Coleman said.

“It would be short sighted to not be giving yourself an opportunity to be capitalizing on the creativity that comes out of these periods,” Coleman said by phone.

This is the first investment in Square Peg by AustralianSuper, the nation’s biggest pension fund. Hostplus has backed two other rounds.

Bloomberg

 

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.