Paris-based VC firm Breega has observed Africa’s tech ecosystem mature over the years. From receiving less than a billion dollars in venture capital per year to a record-high $6 billion, there’s also been an increase in high-growth companies, from one unicorn to seven within the span of 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’s secured commitments for around 70% of the capital in the first close, the firm revealed to TechCrunch.
Since entering the VC scene in 2015, Breega has fully raised four funds: a first seed fund (€45 million), a second seed fund (€110 million), a first venture fund (€106 million), and a second venture fund (€250 million). In under a decade, the French investor, with a portfolio of over 100 startups across 15 countries, has reached $700 million in assets under management.
The “Africa Seed I” fund is Breega’s sixth fund (including a third European seed fund the firm is currently raising) in nine years but the first with a mandate outside Europe. Its launch coincides with opening 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 founders-for-founders fund, investing across pre-seed to Series A stages. “Our DNA is all about backing founders where innovation thrives and opportunities are immense. We bring them our operational expertise because everyone on our team has been on the other side as founders or operators,” said co-founder and CEO Ben Marrel in an interview with TechCrunch.
Marrel notes that this approach, coupled 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 replicate this success in Africa.
As such, launching a fund for early-stage startups stemmed from a desire to tap into the continent’s opportunities. What better way to do that than having local partners who understand the market dynamics and can make informed investment decisions? Larger Africa-focused firms with European roots, such as Partech and Norrsken22, operate a similar strategy.
Melvyn Lubega and Tosin Faniro-Dada are leading Breega’s Africa fund, which received backing from institutions including Bpifrance and the Dutch entrepreneurial development bank, FMO. Both partners bring decades of entrepreneurial and operational experience to the table; before joining Breega, Lubega co-founded the edtech unicorn Go1, while Faniro-Dada was the CEO of Endeavor Nigeria.
Breega plans to invest between $100,000 and $2 million in startups across the Big Four African markets—Nigeria, Egypt, South Africa, and Kenya—as well as Francophone African markets, including Morocco, Senegal, Ivory Coast, Cameroon, and the DRC. 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 firm’s investment strategies, local market dynamics, and the potential of untapped markets on the continent. The interview has been edited for brevity.
TC: $75 million is a sizeable first fund in any market, more so in Africa. If I understand correctly, the fund is for pre-seed and seed startups. But aside from the money, what value does the firm provide that founders may not find at other firms?
Melvyn: All partners and investment team members at Breega are former founders and operators. We know firsthand what it’s like to raise capital, build businesses, face failures, 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 wished we had while building our businesses. Many entrepreneurs value having a sparring partner who has been there and done that before. We want to be the first check in startups, coming in quite strong and leading rounds at pre-seed and seed.
Over a quarter of our team is dedicated solely to supporting our portfolio companies across various areas, such as go-to-market strategy, talent management, governance, brand, and communications. This commitment allows us to offer more than just capital; we provide our entrepreneurs with experienced sparring partners who bring international exposure and ecosystem knowledge. We find this to be not only important to our entrepreneurs but also allows us to have an outsized performance from our European experience.
TC: What sectors is Breega keen on in Africa? And why?
Tosin: Our focus is on industries that can have a transformative impact on addressing current and future challenges across the continent, especially with the expected growth in population, such as fintech, healthtech, proptech, logistics, and edtech.
Melvyn: In addition, you can think of it like a Venn diagram: We target areas that offer the most significant impact, aligned with Sustainable Development Goals (SDGs), and where Breega has significant experience from backing over 100 companies. What’s particularly beneficial is that our insights from successes in Europe and the U.S. inform our approach in Africa, helping us pinpoint where impactful opportunities align with our expertise.
TC: It’s good you touched on that because I’m curious how Breega strikes a balance and avoids the trap of backing US-style and Euro-styled companies in Africa.
Tosin: 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 resemble U.S. or European counterparts. Our focus is solutions that solve unique challenges specific to Africa and its diverse markets. While some similarities exist, we intentionally back solutions tailored to meet local needs.
One of Breega’s advantages is our European team’s experience. They help us understand that Africa is perhaps where Europe was decades ago. They’ve witnessed this evolution, and we’re already following a similar path. This perspective helps us recognize that it’s a journey and an evolution while also being mindful of 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 as if we’ve just placed a team and fund there that operates independently from our main operations. No, it’s fully integrated into our culture, team dynamics, and overall firm strategy. We understand these markets are unique, and we don’t expect to support the same types of companies everywhere. We’re very conscious of this and apply our knowledge of what has worked and hasn’t for us.
TC: What is Breega’s approach to investing in certain markets versus others in Africa?
Melvyn: 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’s why we have investments in Uganda, Guinea, and other markets like Francophone Africa, which is particularly important due to our strong roots in those regions. Additionally, we are committed to supporting and nurturing ecosystems through our investments. As a Pan-African fund, we need to take this broad approach.
TC: These days, VCs are looking to be more pan-African and invest in largely untapped markets, and to your point, such an approach is vital in finding the next Wave. However, such wins are rare, so why prioritize breadth over depth in the largest markets with more potential for VC-scalable businesses?
Melvyn: The reality is that Africa gets 1% of venture capital, yet we have 18% of the population. And so, from that perspective, our role as Breega, being a European and African tier-one investor, is also to be able to go where others honestly can’t go because we believe that there’s value to be created there.
If you think about the ecosystems that we serve, there are some regions that don’t get venture capital but are still very attractive. Also, because we’re taking long-term bets on the continent, we’re very intentional about saying that our role as investors is also to catalyze certain ecosystems.
And so, to your point, you know, before Wave, people weren’t talking that much about Senegal, and it’s what it takes as an investor that understands, beyond following the herd, what fundamentally good investments look like at the early stage, and being able to leverage that experience to go there.
TC: Would you say this model 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 that’s the founders we’re thinking about right now.
The key question isn’t about talent alone but the market these founders are entering. Building a large-scale business in a small country is rare, so a multi-country strategy is crucial. We’re enthusiastic 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’re applying the same strategy in Africa.
TC: I’d like to get a sense of where you think the African VC scene is right now regarding co-investing opportunities.
Melvyn: Many Africa-only or country-specific investors are tending to their current portfolio companies while deploying less to the new businesses. In the same vein, many don’t have the capital to deploy. When you see follow-on rounds and a series of extension rounds, you see many smaller funds struggling to participate meaningfully. And I think that’s also more of a function of the times.
Tosin: I believe the familiar names are still active in investing across various stages and markets. However, they appear to exercise more caution now compared to a few years ago, especially regarding the entrepreneurs they choose to invest in.