Merged venture capital fund aims to fit square peg in series A and B funding hole

Seven local start-up veterans behind two venture funds have combined forces and launched a merged fund to invest in Australian start-ups which will look to invest “several hundred million over the next few years”.

Seek co-founder Paul Bassat, investors Barry Brott, Tony Holt, Dan Krasnostein and Justin Liberman, as well as entrepreneurs Gavin Appel and David Liberman, have created Square Peg Capital by merging Victoria Capital and Square Peg Ventures, both of which launched last year.

Bassat told StartupSmart they had combined the similar funds to meet a gap in available Australian funds.

“Plenty of people in Australia are providing seed capital, but we think there is a gap in series A, B and subsequent rounds,” Bassat says. “Square Peg was operating on the early stage end of the spectrum with venture capital and Victoria Capital was more focused on the growth stages.”

Bassat adds they haven’t structured the company as a fund, as they’ll be investing their own capital and working with a pool of investors, including billionaire James Packer, Seek co-founder Matt Rockman, and Justin Liberman, on a deal-by-deal basis.

“The beauty of not having a fund is we only make investments when the right opportunities emerge,” Bassat says. “It’s nice to not have the pressure to feel compelled to invest in things because the money is sitting there. We’re investing our own capital and our partners, so we’ll be careful.”

The two funds prior to the merger had invested $20 million in 12 companies including Canva, NinjaBlocks, Bella Box and Vend.

“We’ve got the capacity to invest several hundred million dollars over the next few years,” Bassat says. “We have a really good pipeline at the moment. Our investments so far give some indication of the opportunity; although it’s possible we’ll make slightly fewer investments but they’re likely to be a bit larger.”

Square Peg Capital is keen to invest in businesses across a range of sectors and growth stages.

“First and foremost, we want to back fantastic people who are smart, passionate and high integrity,” Bassat says.

“For businesses that have been around for a few years and have a bit more traction, the question of if they’re solving a problem has been partially answered. If it’s an early stage business without a track record, we want to know exactly what the problem you’re trying to solve is if you’re actually solving it, in a unique and differentiated way.”