A group of Australian investors and entrepreneurs, including casino magnate James Packer, have banded together to create a venture capital fund intended to rival the storied Sand Hill Road VCs from the United States.
The group, which also includes Seek founder Paul Bassat, intends to allocate hundreds of millions of dollars into the fund, which has been dubbed Square Peg Capital, targeting Australian and overseas prospects.
The founding of the fund was first reported by the Australian Financial Review.
According to Bassat, there’s a dearth of funding sources for organisations seeking capital in the range of $20 - $40 million. “When you chat with them they say they have had phone calls from chaps in the US a lot over the years, but almost no phone calls from anyone in Australia,” he told the AFR.
The fund is the product of the merger of two existing funds - Square Peg Ventures and Victoria Capital - which were aimed at start-ups and businesses which were going concerns. The new entity will invest across all stages of growth.
Unlike many US funds, Square Peg won’t participate in the traditional “funding round” model which has worked successfully overseas. Instead, the fund managers will proactively approach entrepreneurs they believe need capital and have the business nous to be successful.
The fund has already invested $20 million in twelve companies but, despite its claims not to participate in funding rounds, it has contributed to a round of $20 million funding in travel site Wego alongside two private equity funds.
Bassat said there are a few off-shore players looking at Australian businesses, including AOL founder Steve Case, who put $40 million into local ecommerce software provider Big Commerce, along with Accel Partners, which invested $60 million in local software darlings Atlassian, together with a further $35 million in website designers 99designs.
He also commented many local entrepreneurs are still selling themselves short, as well as noting there are more aggressive players in the market than when he started Seek in the 1990s.
“If we looked back in five or 10 years from now we would be disappointed if we had not made a difference,” he told the paper.