Australian venture capital (VC) firm Square Peg plans to raise $550 million for its sixth fund in the second half of 2024 while maintaining its focus on investment activities in Southeast Asia, Australia, and Israel, a top executive told DealStreetAsia.
Square Peg also plans to beef up its Southeast Asian investment team, based out of Singapore.
“Southeast Asia has remained a dominant market for us. We expect it to be a really important market for us in this next fund as well,” Square Peg Partner Tushar Roy said. The firm has recently closed two new investments in the region – Singapore-based AI tech startup Mindverse and an Indonesian fintech startup that will be announced in the next few weeks.
The upcoming fund will invest in seed to Series B as a first cheque with ticket sizes ranging from $1 million to $15 million. The firm aims to make around 20-25 investments from the new fund.
Square Peg will continue to focus on investments in fintech, SaaS, AI, and climate. Square Peg announced the closing of its fifth fund in 2022 at $550 million, the same size as the successor.
Leila Lee, who has been with the VC firm since 2017, was recently named partner and will be in charge of the fund’s capital raising and investor relations.
Square Peg’s new vehicle comes amid an overall tepid fundraising landscape. Per DealStreetAsia’s SE Asia’s VC Funds: H2 2023 Review, limited partners have been exercising caution, especially for first-time funds.
However, LPs have been seen favouring established fund managers with proven track records.
Square Peg said it has returned over 1 billion SGD ($739 million) to investors, boasting exit returns with an average multiple of 6x across 16 companies, an IRR of 44%, and a DPI (from its 2012 vintage) at 4.6x.
“Thanks to the support of our investors who continue to support us across multiple funds, I think at this point in the cycle, what’s going to be slightly challenging is … as the market sort of contracts, we don’t take anything for granted,” Roy said.
“We have to work extra hard to convince asset allocators and investors in different parts of the world that these regions deserve their capital,” he said.
The firm has made several exits in the last six months, especially among its Israeli portfolios. It has also made a partial exit from tech unicorn Canva. More than 60% of exits have come from other portfolio companies including PropertyGuru, Fiverr, and Vend.