Square Peg, Australia’s largest pensions-backed venture capital firm, announced that it is ramping up its investments in Southeast Asia after closing its fourth pool of venture capital at $450 million.
The fundraising was led by Australian institutions HostPlus and AustralianSuper, and backed by CBA and Roc Partners. The latest vehicle takes Square Peg’s total funds under management to over $1 billion.
Founded in 2012 by Paul Bassat, Tony Holt, Justin Liberman, and Barry Brott, Square Peg invests in technology startups across Australia, Israel, and Southeast Asia with a focus on Series A and B rounds.
The firm’s global team, which has offices in Israel and Australia, has already backed several unicorns such as cross-border fintech startup Airwallex, online design software company Canva, and freelance marketplace giant Fiverr, which is now valued at $7 billion.
With the fresh capital to invest, Square Peg is looking at doubling down on Southeast Asia. It opened its Singapore office in August this year after covering the region remotely for many years, and hired Stripe’s Southeast Asia and Hong Kong Head, Piruze Sabuncu, as a partner to join Tushar Roy.
The firm, however, is not a neophyte investor in the region. Square Peg said its Southeast Asian arm has quietly invested over $100 million in Southeast Asia since its investment in Asia’s largest online property group, PropertyGuru, back in 2015.
Its regional portfolio now includes buy now, pay later platform FinAccel, health-tech platform Doctor Anywhere, robo-advisor StashAway, and micro-mobility service provider Neuron Mobility.
Sabuncu said Southeast Asia is rapidly becoming one of the most valuable and high-potential ecosystems for the next generation of successful technology companies.
“We have reached a tipping point where Southeast Asian founders are no longer content to build copy-cat companies from overseas for a local market and are instead building globally defining businesses founded right here,” she said.
Square Peg’s focus on Southeast Asia comes as funds targetting the region reported nine final closes from January through September this year, versus 19 and 14, respectively, in the same period in 2019 and 2018, according to DealStreetAsia’s SEA Asia VC Funds: Q3 2020 Review.
Foreign VCs, or those not headquartered in the region but with Southeast Asia among their target markets, closed six funds in the first nine months of this year, compared with one fund each in the same period of 2019 and 2018.
Beyond closed funds, there are 61 VC funds currently in the market to raise capital for Southeast Asia, of which 49 are from VCs that are headquartered in the region, mostly in Singapore, according to the report.
The slowdown in momentum in the first nine months of this year was due to the dislocation caused by the COVID-19 pandemic.
“Raising this fund during the COVID-19 pandemic was a unique experience, but as many founders know, fundraising is rarely a straightforward process. Our investors take a long-term and committed approach to investing and understand that venture capital is often uncorrelated to the markets while offering the potential for significant returns,” Roy said.