One of Australia’s most powerful technology investors, AFL commissioner Paul Bassat, has defended his firm Square Peg’s track record of backing early-stage entrepreneurs as he announced its fifth fund is ready to begin deploying $850 million into start-ups.
Square Peg, one of Australia’s pre-eminent venture capital firms, has generated outsized returns from early investments in prominent global tech companies including Israeli online marketplace Fiverr and US app enabled transport company Uber. But the firm, which has also invested in local “unicorns” such as Airwallex and Canva, has attracted some criticism from founders for not investing in Australian start-ups at the earliest stages.
Last week Bassat posted on LinkedIn, the professional social network that is a hub for technology investors and founders, to dispel a perception his fund was not willing to back start-ups early on. He asked why that perception exists, triggering a spiky response from the co-founder of online healthcare company Eucalyptus, Tim Doyle.
“Because you do by far the least community engagement and building out of the big funds,” said Doyle, whose company is backed by funds that are rivals to Square Peg. “That would be my guess.”
Bassat told this masthead Square Peg believed it had contributed to the start-up ecosystem and had a strong record of backing very early-stage Australian companies. He named firms it invested in when they had zero or scant revenue, including payments firm Airwallex, ecommerce firm ROKT and Canva. “I reckon we’re doing alright,” Bassat said.
Bassat said the firm was looking to invest in up to 25 new companies with its new fund, continuing with its typical split of making about half of those investments at the earliest “seed” stage and half at the later “series A” stage. But a major portion of the money will go to repeatedly backing its companies as they grow.
“We are also all in, all in our portfolio companies and we don’t apologise for that. We spend the bulk of our time on our portfolio companies. That’s what they expect, what our investors expect, that’s what we love doing.”
Some of the nation’s biggest superannuation funds, Australian Super and Hostplus, committed to the fund alongside wealthy investors and other institutions.