Good evening,

Canva’s $US2.4 billion ($3.6 billion) secondary share sale couldn’t have come at a better time for one of its backers, Square Peg, which has a decent exit to crow about in its June 30 numbers – just as it hits up investors for its latest fund-raise.

The venture capital investor began mailing out performance numbers to investors on Monday evening, no doubt hoping to entice them into attending Wednesday meetings for a $US550 million joint raise for its Fund 6 and Opportunities Fund 3.

In the latest set of numbers, Square Peg told investors it has realised $US768 million (up from $US583 million at December 31) over its 12-year history.

The June half was a good one for the firm, after it failed to score even one exit in all of 2023. It put $US187 million back in investors’ pockets from three deals. It trimmed down its position in Canva, got an exit at Deci.AI which fielded a $US300 million bid from none other than Nvidia, and – finally – sold into a secondary share sale at Bugcrowd.

All up, Square Peg valued its portfolio at $USS2.9 billion (up from $US2.7 billion at December 31), and boasted a 44 per cent gross internal rate of return on exits (up from 42 per cent).

It has also changed tune on technology valuations, saying things are looking up both for its portfolio companies and the broader environment and exits should ramp up in 2025 and 2026.

Out of the door are big write-down provisions introduced in 2022 – and first revealed by this column – when it marked down its Fund 1, Fund 2 and Fund 3 by 15 per cent. These provisions now are much smaller, to the tune of $US30 million for the $US611.7 million Fund 2.

And back in favour are “upwards portfolio revaluations”, which Square Peg told investors drove performance during the June half alongside reductions in the provisions.

However, it’s undeniable that Square Peg still has a long way to go in returning cash to investors – especially outside of Canva, which speaks for a third of the firm-wide total – and that returns have come down significantly since the heyday of lower interest rates. Take Fund 1 for example, the internal rate of return was 25.8 per cent at end of 2021; 20.3 per cent in mid-2022, and 15 per cent now.

Read the full story tomorrow and more on the Street Talk page.

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