For tech investor Ben Hensman, the best companies always start with the founders. Before the Square Peg portfolio manager – a firm best known for its early bets on Airwallex, Canva and Rokt – even thinks about margins or growth rates, he’s looking at the people to see if they have curiosity, intensity and an ability to keep learning.
“The most important thing we look for, both in our private and listed investments, is the founder,” says Hensman, who is making his debut at the Sohn Hearts & Minds investment conference in Sydney on Friday.
“We’re really looking for people who have that strong growth arc. Even though they’ve reached material scale, they’re still changing and moulding their company to move really fast, and they’re curious.”
His comments perhaps hint at his stock pitch at Sohn, considering the Square Peg Global Tech Fund only holds around 15 companies.
After starting his career at Fidelity International under veteran stock picker Paul Taylor, he joined Square Peg in 2016. His first five years were spent working on the venture capital fund before he helped to launch the tech fund, which invests in public companies at the later stages of growth.
One of his earliest experiences on the VC side was in 2017 working on Square Peg’s investment in fintech giant Airwallex, which was founded by a young Jack Zhang.
“What stood out about Jack was his hunger, tenacity, and intensity around solving this problem. Technically, what they’re doing is difficult; it requires real persistence and creativity.”
Founded in Melbourne a decade ago, Airwallex is today valued at $9.5 billion with annual recurring revenue of about $1.5 billion. Hensman says Zhang’s evolution mirrors the traits he looks for in founders of listed companies.
“Jack’s vision was exciting in the early days, but it grew over time. He scaled with the business, and that’s what we look for. Founders who can scale themselves at the same pace as their company.”
Bubble territory
That founder-first mindset also affects how Hensman thinks about valuations, especially in the current environment, where large-cap tech stocks are trading at record multiples that have raised fears of a bubble.
“It’s really important to stay disciplined on valuation, even when companies are performing extremely well and getting high premiums,” he says.
“There’s a lot of excitement in markets about artificial intelligence right now … anything perceived to be a really clear AI winner is attracting very high valuations.”
Hensman says the differences between private and public valuations of technology companies come down to growth and AI exposure.
“The private companies with the highest valuations are typically focused on AI and have incredibly high-growth rates,” he says.
“That’s similar to the public side, where there’s a clear view that they’re a winner. We think investing from seed through to listed, up and down the AI stack, allows us to understand when that growth is both durable and valuable.”
Among Square Peg’s top holdings are Datadog, Shopify and Reddit, which are all led by founder-driven teams.
Datadog is among Hensman’s largest holdings and as an infrastructure monitoring business, it epitomises what Square Peg looks for in scalable software company. The shares have rocketed around 40 per cent this year.
“It’s a very profitable business, still founder-led, and they’re building defensibility around a true platform,” Hensman says. “They’re exactly the kind of company we like – multiple products, multiple growth drivers, and a team that continues to attract world-class talent.”
AI will change everything
Shopify, meanwhile, is tapping into Square Peg’s belief in long-term digital commerce trends. The platform has built enormous scale and processes hundreds of billions of dollars in gross merchandise value.
“Shopify built the greatest amount of gravity around itself, and an ecosystem that supports every aspect of running an online store,” Hensman says.
He expects Shopify’s role will only grow as commerce becomes increasingly integrated with AI.
“When commerce through AI and agentic commerce become real ways that consumers purchase things, and that’s coming, Shopify will be a really important player,” the fund manager says.
“They’re already providing the infrastructure and data that large language models need to understand how people shop.”
Then there is Reddit, which Hensman has been watching closely since the social media company’s market debut in March last year. The shares have since soared more than 300 per cent.
“The defining thing for social media businesses is how deep the engagement is in their community, and how well that lends itself to monetisation,” he says. “Reddit has this incredible community with real depth of engagement – it’s human, text-based content.”
He expects Reddit to become even more relevant as AI changes how people search and interact online.
“Google has roughly 14 billion daily queries – that means we look for answers differently, we buy things differently,” he says. “Reddit is one of the few parts of the internet that will stay human and dynamic.”
This article was originally posted by The Australian Financial Review here.
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