(Bloomberg) -- Square Peg Capital, the Australian venture capital firm co-founded by Paul Bassat, raised $550 million for its fifth fund, a rare sign of confidence in the technology sector during a tumultuous year.

The Melbourne-based firm will allocate $350 million of the total to early-stage deals and $200 million to later-stage investments, Bassat said in an interview. Square Peg, founded in 2012, will invest the money across Southeast Asia, Australia and Israel.

“This feels like the perfect size relative to our team size and relative to an ambition to maximize our returns,” Bassat said in the interview. “Ultimately the fund size should be a construct that maximizes the likelihood of delivering outstanding returns.”

Square Peg was an early investor in companies such as software maker Canva Inc. and digital payments firm Airwallex Pty, which went on to become two of Australia’s most valuable startups and have expanded globally. Bassat started the firm after 14 years of building the job-search site Seek Ltd., taking inspiration from Apple Inc.’s Think Different ad and aiming to support founders who could think differently about business.

Square Peg has garnered an internal rate of return of 43% based on all exits to date, according to the company. Its first pool of capital of about $120 million has returned more than 3.5 times cash.

With the fresh capital, the company plans to bet on emerging winners in software-as-a-service, consumer internet, fintech, education tech, health tech and future of work technologies, according to Singapore-based partners Tushar Roy and Piruze Sabuncu.

“Southeast Asia will breed many big companies in the next five years that are very unique to this region,” said Sabuncu, who joined Square Peg in 2020 after building Stripe Inc.’s business in the region. “There is a huge gap in basic services that growing middle class would need in countries like Indonesia and Vietnam.”

Many of its portfolio companies are already expanding globally. They include LottieFiles, a motion graphics platform that streamlines the animation workflow. LottieFiles serves more than 135,000 companies including Google, Airbnb Inc. and Netflix Inc.

Square Peg’s other portfolio companies include digital lending unicorn FinAccel Pte, telemedicine app Doctor Anywhere Pte, online real estate marketplace PropertyGuru Group Ltd., and Pluang, an investment platform in Indonesia.

Bassat represents the first generation of internet entrepreneurs in Australia. When the former lawyer launched Seek with his brother in 1997, there were hardly any tech startups in the country. Bassat’s influence helped spur new companies.

Airwallex co-founder Jack Zhang first met Bassat in 2006 when he was a university student. Then a co-founder of Seek, Bassat spoke at a Goldman Sachs Group Inc. event in Melbourne about his entrepreneurial journey. In the audience was Zhang, who was inspired enough that he decided to become an entrepreneur one day.

Their paths crossed again 11 years later, this time as a founder and investor. By then, Zhang had launched Airwallex and Bassat was running Square Peg. Bassat was drawn to Zhang’s ambition to target the global market and invested in Airwallex’s Series A+ funding round in late 2017.

“I don’t know if Airwallex could have existed today without Paul’s investment at the time,” said Zhang, chief executive officer of Airwallex. “Because Paul is an ex-entrepreneur, he has a strong instinct about people.”

Square Peg joined Airwallex’s most recent funding round at a $5.5 billion valuation, unchanged from the previous round at a time when many tech companies see their valuations plunge.

Airwallex reflects Square Peg’s investing approach, said Roy. The firm typically does three to five deals a year in Southeast Asia and then works with them for years.

“You’re not going to see us doing 50 investments a year in Southeast Asia,” he said. “We want to do venture differently.”

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