A co-founder of Melbourne’s Square Peg Capital says that the Australian startup industry now has control of its own destiny, after his venture capital firm this week confirmed raising $US180 million ($AU235 million) for its first fund.
“The capacity to grow the business of venture, entrepreneurship, tech and so on in this country is much more in our own hands than it has been in the past,” Square Peg co-founder and partner Tony Holt told Business Insider.
“The ability to control your destiny, focus on making good investments and have the capital available is a pretty privileged position.”
Square Peg’s fundraising effort came just months after AirTree’s new $250 million pot, which took the crown of Australia’s largest venture fund from Blackbird Ventures after it had secured $200 million for its managed fund in late 2015.
AirTree last month announced it had led a $25 million funding round for fintech startup Prospa, while Blackbird has invested in companies such as the $US1.5 billion self-driving project Zoox and smart headphones maker Nura.
Holt said that local startup funds have never been in more capable hands than currently, giving the industry its best chance to ensure capital remains available to entrepreneurs in the longer term.
“There are four or five really good quality managers in the tech venture space. We haven’t seen that scale before,” he said.
“Our role and opportunity now is to generate returns for investors so that we make this the start of a really long-term cycle of improvement and positive returns.”
Australian venture capital funds raised a record $568 million in the 2015-16 financial year, according to numbers compiled by EY and the Australian Private Equity and Venture Capital Association.
Superannuation fund Hostplus, with a reported $US50 million contribution to the latest pot, became the first institutional backer in Square Peg’s history. Hostplus is proving to be a significant backer of the Australian startup scene, after it also contributed to Blackbird’s managed fund in 2015.
Seek co-founder Paul Bassat, ranked number 21 in the Business Insider Tech 100, founded Square Peg in 2012. The VC firm has since pumped $US120 million into startups through a collective model, including now-household names like Canva, Stripe, Uber, Vend and Bugcrowd.
While declining to comment on specific cases, Holt said Square Peg had “a number of good exits” in the past and is looking forward to more.
“Many of the companies within the portfolio are [now] really significant from a revenue point of view, and they’re going to have multiple, attractive exit opportunities for us in the coming couple of years,” he said.
In the past year, Square Peg shifted away from a collective to a more traditional VC fund. Holt said that this was a subtle change that didn’t have much day-to-day impact on how the firm operated.
The new money would focus on companies in Australia, New Zealand and Israel, and to a lesser extent, south-east Asia. Square Peg makes its investments through “warm introductions” of startups through its personal networks, rather than through formal pitching channels.
Holt came from corporate banking, boasting stints at Macquarie Capital, Citigroup and Merril Lynch before he co-founded Square Peg Capital with Bassat.
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