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Square Peg to raise USD550 million, bullish on Southeast Asian startups

SINGAPORE (CNA) – Australian venture capital firm Square Peg is raising USD550 million to expand its commitment to back startups in its key markets, with a growing focus on Southeast Asia’s booming tech markets.

“We do want to continue to double down in Southeast Asia in particular,” a Singapore-based partner at Square Peg Tushar Roy, told Reuters in an interview. “We are currently exploring investment opportunities across most markets in the region.”

Founded in 2012, the venture capital firm is one of Australia’s largest, with more than USD1 billion in assets under management across multiple funds.

Roy said Square Peg’s Fund 4, targetting new investments, and Opportunities Fund 2, designed to invest in later-stage follow-on offerings in portfolio firms, were set to complete their fundraisings in the first half of the year.

Venture firms have been ramping up investments in Southeast Asia as rising consumer adoption of digital platforms since the COVID-19 pandemic fuels startups across many sectors.

“There’s now more capital that’s becoming available in these markets to take these companies from early stage to mid stage to growth stage,” said Roy, who moved from Sydney in 2020 to set up Square Peg’s Southeast Asia office.

“The overall prospects of success for companies from an end-to-end journey perspective are better today than they were, maybe five years ago,” he said.

Last month, global venture capital firm Accel launched a USD650 million fund for Indian and Southeast Asian startups, while Indonesia-focussed Alpha JWC Ventures and AC Ventures raised new funding rounds late last year.

Square Peg’s 50-plus investment portfolio includes Australian design collaboration platform Canva, Singapore-headquartered global e-scooter operator Neuron Mobility, and Southeast Asian fintech firm FinAccel.

The VC firm invests in areas such as consumer Internet and software as a service, and mainly participates in companies’ Series A and B funding rounds. It hired Piruze Sabunca, a former senior executive of United States digital payments firm Stripe, as a partner in its Singapore office in late 2020.

Roy said a sharp fall in equity markets in recent months had affected private fundraisings of companies. “With round sizes stabilising and possibly getting smaller, you should see the commensurate effect on valuations.”

Still, capital was available for some companies, he said.

“You are seeing a flight to quality in private markets where a smaller cohort of companies that have healthy unit economics, healthy balance sheets, healthy business and a proven product market are attracting more and more attention,” Roy said.