Australian venture capital firm Square Peg has closed two new investment funds, directing the larger share of its capital towards established businesses while continuing to back emerging technology startups.
Australian venture capital firm Square Peg has raised more than $1 billion across two investment funds, strengthening its capacity to support both early-stage startups and larger technology businesses.
Funding will go to both Funds 6 and Opportunities Fund 3; however, the most important aspect of this funding is the way in which it will be utilized. While about 40% of this funding has been set aside for early stage investments, 60% has been put aside for larger companies.
The firm confirmed that the combined fundraising exceeded $1 billion but did not disclose the final amount or identify the investors who participated, according to reporting by Forbes Australia.
The closing marks another significant fundraising development for Australia’s venture capital industry, following a separate billion-dollar fund announcement by fellow investment firm Blackbird.
Two Funds, Two Different Investment Priorities
Square Peg’s latest fundraising is built around two investment strategies that address businesses at different stages of development.
Fund 6, which accounts for approximately 40% of the capital, will focus on early-stage investment opportunities. It continues the firm’s approach of backing emerging technology companies during their earlier phases of growth.
Opportunities Fund 3 has received the larger allocation, representing roughly 60% of the money raised. This fund is designed to invest in larger businesses, including companies Square Peg already backs and new opportunities beyond its current holdings.
The allocation stands out because most of the newly raised capital is directed towards investments outside the firm’s early-stage strategy.
Fundraising Was Disclosed in July, but the Amount Remained Undisclosed
Although the fundraising has now been reported publicly, its completion was previously communicated to investors.
Square Peg co-founder Paul Bassat disclosed the final close in a July investor letter but did not reveal the amount raised.
The firm has since confirmed that the combined total surpassed $1 billion. However, the precise size of each fund has not been made public beyond the approximate percentage allocations.
Canva, Airwallex and Stripe Feature in Square Peg’s Investment Portfolio
Square Peg has built a portfolio that includes several prominent technology companies.
Among its investments are Canva, Airwallex, Zeller and Deputy.
Its holdings also include payments company Stripe and artificial intelligence venture Thinking Machines Lab.
The breadth of these investments reflects Square Peg’s involvement across different parts of the technology sector.
With Opportunities Fund 3 focused on larger businesses, the latest fundraising also provides capital for investments beyond the early-stage companies targeted by Fund 6.
Israel and Southeast Asia Remain Important Markets
Square Peg’s investment activities extend beyond Australia, with Israel and Southeast Asia continuing to feature in its geographic focus.
The firm has invested in Israel since its inception and opened an office in Tel Aviv in 2014.
It subsequently established a Singapore office in 2020, extending its presence into Southeast Asia.
This makes up the international investment reach of Square Peg, giving it access to several technology markets and not limiting its focus to startups in Australia.
The new fundraising comes as Square Peg maintains this international focus.
Square Peg Reports $1.4 Billion in Returns From 19 Company Exits
Beyond the size of its latest funds, Square Peg has disclosed figures outlining its investment track record.
Since 2012, the firm says it has generated more than $1.4 billion in returns through exits from 19 companies.
It also reports a gross internal rate of return, or IRR, of 41%.
Blackbird’s $1.05 Billion Fund Adds to Australia’s Venture Capital Fundraising Activity
Square Peg’s fundraising follows another major capital raise by Australian venture capital firm Blackbird.
In August, Blackbird announced a $1.05 billion sixth fund, with backing from investors including Morgan Stanley, Schroders and Adams Street Partners.
The announcements place two Australian venture capital firms above the billion-dollar fundraising threshold in the same year.
What Square Peg’s Latest Fundraise Means for Its Investment Strategy
The most revealing aspect of Square Peg’s fundraising may not be the billion-dollar figure itself, but how the money has been divided.
With approximately 60% allocated to Opportunities Fund 3, the firm has reserved the larger portion for investments in more established businesses, including companies it does not currently back.
At the same time, allocating roughly 40% to Fund 6 keeps early-stage investing an important part of its strategy.
That structure allows Square Peg to pursue opportunities at different stages of company development while maintaining its investment presence across Australia, Israel and Southeast Asia.
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