Square Peg Capital, a Melbourne-based venture capital firm (VC) has hit the final close of its $235 million second fund, a corpus much larger than the initial target of $158 million (A$200 million) reported last year.
In an interview with DEALSTREETASIA, its Israel-based partner Dan Krasnostein said the VC firm reached the final close of the fund in April.
He added that the fund invests across Australia/New Zealand, Israel and Southeast Asia. Its portfolio includes a number of prominent startups such as Uber, Stripe, PropertyGuru, Deputy, Fiverr, Kredivo and Airwallex.
Square Peg typically targets investments in Series A to B category, with ticket sizes ranging from $4-$10 million. It often leads fundraising rounds once it identifies a strong player in the market.
Krasnostein said: “In all our geographies, we are looking for incredible teams solving really large problems. Particularly in Southeast Asia, this could be in models that have proven to be highly successful in other parts of the world and in which we think the winner will be a local player (e.g. PropertyGuru) or (those) creating models playing to the unique dynamics of the region (e.g. FinAccel), targeting creditworthy but under-served consumers with cheap, accessible credit.”
Square Peg also targets marketplaces, which it considers to be a key strength for the VC firm. Krasnostein explained that by a marketplace, it means the ‘winner-takes-all market’, that makes up for strategic bets – especially when it fundamentally transforms the way the market operates.
“The first thing we ask ourselves is: Is a marketplace the best model to solve the problem? In a lot of cases the answer is yes, and in a lot of cases the answer is no,” said Krasnostein. “The second question we ask ourselves is: Is this a very big problem? Is the marketplace helping solve the most important problem for its participants, and therefore creating a lot of strategic value and an ability to build a very large business?”
Square Peg’s limited partners (LPs) are primarily from Australia. They include institutional investors such as pension funds, apart from family offices and high net worth individuals. Its general partners (GPs) have also heavily invested in its funds, including the fund’s co-founder, Paul Bassat.
The fund invests flexibly across its regions, depending on available opportunities. It broadly deploys about 40 percent of its capital in Australia/New Zealand, another 40 per cent in Israel, and the remaining 20 per cent in Southeast Asia.
Square Peg Fund II has made four investments so far: Israel-based AI healthcare startup Aidoc; Israel-based serverless security platform PureSec; Australia-based employee management startup Deputy; and Indonesia-based online credit startupKredivo.
The VC firm has about $550 million in assets under management across a portfolio of about 30 companies.