Paris-based VC firm Brega has seen Africa’s tech ecosystem mature over the years. From receiving less than a billion dollars in venture capital annually to a record $6 billion, there has also been an increase in high-growth companies, from one unicorn to seven in three years.
Now the VC wants to put some of its own money behind what it sees, with a $75 million fund to invest in early-stage startups in Africa. It has secured commitments for around 70% of the capital in the first close, the company revealed to TechCrunch.
Since entering the VC scene in 2015, Breega has fully raised four funds: a first seed fund (€45 million), a second investment fund (€110 million), a first venture fund (€106 million ) and a second venture capital fund ( 250 million euros). In less than a decade, the French investor, with a portfolio of more than 100 startups in 15 countries, reached $700 million in assets under management.
The ‘Africa Seed I’ fund is Breega’s sixth fund (including a third European seed fund the company is currently raising) in nine years, but the first mandated outside of Europe. Its launch coincides with the opening of two new offices in Lagos and Cape Town, key hubs in Africa’s tech ecosystem. These offices join Breega’s existing locations in Paris, London and Barcelona, strengthening its presence across the EMEA region.
Breega prides itself on being a founder-for-founder fund, investing in pre-seed to Series A stages. “Our DNA is about supporting founders where innovation thrives and opportunities are huge. We bring them our business expertise because everyone on our team has been on the other side as founders or operators,” said co-founder and CEO Ben Marel in an interview with TechCrunch.
Marrel notes that this approach, combined with a dedicated scaling and portfolio support team, has propelled Breega to become one of the fastest growing VCs in Europe. The intention is to repeat this success in Africa.
Therefore, the launch of a fund for early-stage startups came from a desire to tap into the continent’s opportunities. What better way to do this than by having local partners who understand market dynamics and can make informed investment decisions? Larger African-focused companies with European roots, such as Partech and Norrsken22, are pursuing a similar strategy.
Melvin Lubega and Tosin Faniro-Dada lead Breega’s Africa fund, which received backing from institutions such as Bpifrance and Dutch business development bank FMO. Both partners bring decades of business and operational experience to the table. Before joining Breega, Lubega co-founded edtech unicorn Go1, while Faniro-Dada was the CEO of Endeavor Nigeria.
Breega plans to invest between $100,000 and $2 million in startups in the big four African markets – Nigeria, Egypt, South Africa and Kenya – as well as French-speaking African markets such as Morocco, Senegal, Cote d’Ivoire, Cameroon and the PRC. The Africa-focused VC firm has already backed nine startups, including Numida, Hohm Energy, Socium, Klasha, Kwara, Coachbit and Sava, and aims to make at least 40 investments from this first fund.
In an interview with TechCrunch, the partners discussed Breega’s interest in Africa, the company’s investment strategies, local market dynamics and the potential of untapped markets on the continent. The interview has been edited for brevity.
TC: Seventy-five million dollars is a significant first capital in any market, more so in Africa. If I understand correctly, the fund is for pre-seed and seed startups. But money aside, what value does the company provide that founders might not find at other companies?
Melvin: All Breega partners and investment team members are former founders and operators. We know firsthand what it’s like to raise capital, build businesses, face failure and endure tough times. Reflecting on my experience, I struggled to find African investors who had built businesses without raising money. That’s why our goal is to be the investors we wish we had when creating our businesses. Many entrepreneurs appreciate having a match partner who has been there and done that before. We want to be the first startups to check in, that come in quite strong and top rounds in pre-seed and seed.
Over a quarter of our team is dedicated solely to supporting our portfolio companies in a variety of areas including go-to-market strategy, talent management, governance, branding and communications. This commitment allows us to offer more than just funds. we provide our entrepreneurs with experienced partners who bring international exposure and ecosystem knowledge. We find that this is not only important for our entrepreneurs, but also allows us to get an outsized return from our European experience.
What sectors is Breega interested in in Africa? And why;
Tocin: Our focus is on industries that can have a transformative impact in addressing current and future challenges across the continent, especially with the expected population growth, such as fintech, healthtech, proptech, logistics and edtech .
Melvin: Furthermore, you can think of it like a Venn diagram: We target areas that deliver the most significant impact, aligned with the Sustainable Development Goals (SDGs) and where Breega has significant experience from supporting more than 100 companies. What is particularly beneficial is that our learnings from successes in Europe and the US inform our approach to Africa, helping us identify where significant opportunities align with our expertise.
It’s good you brought it up because I’m curious how Breega strikes a balance and avoids the trap of supporting US and Euro-style companies in Africa.
Tocin: It boils down to having local partners on the ground who understand the challenges of different markets. With my extensive experience in Nigeria and Melvin’s in South Africa, our mindset remains unchanged. We don’t invest in companies because they look like their US or European counterparts. Our focus is on solutions that solve unique challenges specific to Africa and its diverse markets. Although there are some similarities, we intentionally support solutions tailored to local needs.
One of Breega’s strengths is the experience of our European team. They help us understand that Africa is perhaps where Europe was decades ago. They have witnessed this development, and we are already following a similar path. This perspective helps us recognize that it is a journey and an evolution, while keeping in mind the current state of the market and the solutions needed today.
Ben: I think what Tosin said is incredibly important. I spend a lot of time with our team in Africa, so it’s not like we’ve put a team in place and we’re funding where it operates independently of our core business. No, it is fully integrated into the culture, team dynamics and overall strategy of our company. We understand that these markets are unique and we don’t expect to support the same types of companies everywhere. We know this very well and apply our knowledge of what has worked and what hasn’t for us.
What is Breega’s approach to investing in certain markets versus others in Africa?
Melvin: We don’t want to invest only in the big four countries (Nigeria, South Africa, Egypt and Kenya) because we understand that talent is equally distributed. That is why we have investments in Uganda, Guinea and other markets such as French-speaking Africa, which is particularly important because of our strong roots in these regions. In addition, we are committed to supporting and nurturing ecosystems through our investments. As a Pan-African fund, we need to take this broad approach.
These days, VCs are trying to be more pan-African and invest in largely untapped markets, and in your view, such an approach is crucial to finding the next Wave. But such wins are rare, so why prioritize breadth over depth in the largest markets with more potential for VC-scalable businesses?
Melvin: The reality is that Africa receives 1% of venture capital, yet we have 18% of the population. And so, from that perspective, our role as Breega, as a European and African tier one investor, is also to be able to go where others frankly can’t go because we believe that’s where value needs to be created.
If you think about the ecosystems we serve, there are some areas that don’t get venture capital but are still very attractive. Also, because we are taking long-term bets on the continent, we are very intentional about saying that our role as investors is also to catalyze certain ecosystems.
And so, to your point, you know, before the Wave, people weren’t talking about Senegal that much, and that’s what it takes as an investor who understands, beyond following the herd, what fundamentally good investments look like at the initial stage, and be able to use that experience to go there.
Would you say this model has worked for Breega after almost a decade of investing in Europe?
Ben: I think it did. The advantage of people starting a business from smaller countries is that they usually start thinking globally from day one. And those are the founders we’re thinking about right now.
The key question is not just about talent but the market these founders are entering. Building a large-scale business in a small country is rare, so a multi-country strategy is vital. We are excited about supporting founders in smaller African countries as long as they have an international expansion plan. This approach has been successful for us in Europe, and we are applying the same strategy in Africa.
I’d like to get an idea of where you think the African VC scene is right now in terms of co-investment opportunities.
Melvin: Many Africa-only or country-specific investors gravitate toward their current portfolio companies while investing less in new businesses. In the same vein, many do not have the capital to develop. When you look at subsequent rounds and a number of expansion rounds, you see a lot of smaller funds struggling to participate meaningfully. And I think that’s also more a function of the season.
Tocin: I believe the big names are still active in investing at various stages and markets. However, they seem to be more cautious now compared to a few years ago, especially when it comes to the entrepreneurs they choose to invest in.
