Paris-based venture capital firm Briga has watched Africa's tech ecosystem mature over the years, with venture capital funding rising from less than $1 billion per year to a record $6 billion and the number of fast-growing companies on the rise, from one unicorn to seven in the space of three years.
Now the venture capital firm wants to put some of its own money towards a $75 million fund to invest in early-stage startups in Africa, and told TechCrunch it had secured roughly 70% of the capital commitments by the first deadline.
Since entering the venture capital industry in 2015, Breega has raised four funds: its first seed fund (€45 million), its second seed fund (€110 million), its first venture fund (€106 million) and its second venture fund (€250 million). In less than a decade, with a portfolio of over 100 startups in 15 countries, the French investor has reached $700 million in assets under management.
The “Africa Seed I” fund is Breega's sixth fund in nine years (including the company's third European Seed fund, which is currently being launched), but its first to focus outside of Europe. The fund's launch coincides with the opening of two new offices in Lagos and Cape Town, key hubs of Africa's tech ecosystem. These offices join Breega's existing offices in Paris, London and Barcelona, strengthening its presence across the EMEA region.
Breega prides itself on being a founders' fund for founders, investing from pre-seed to Series A stage. “Our DNA is to back founders where innovation is thriving and the opportunities are endless, and we offer them operational expertise because all of our team have been on the other side as founders and operators,” co-founder and CEO Ben Marrel told TechCrunch in an interview.
Murrell notes that this approach, combined with a dedicated scaling and portfolio support team, has helped Breega become one of the fastest growing VCs in Europe, and the goal is to replicate this success in Africa.
That's why we launched our fund for early-stage startups, driven by our desire to capitalize on the opportunities on the African continent. And what better way to achieve that than by having a local partner who understands market dynamics and can make informed investment decisions? Similar strategies have been adopted by other large Africa-focused companies with European roots, such as Partech and Norrsken22.
Melvin Lubega and Tosin Faniro Dada lead Breega's Africa fund, which is backed by institutions such as Bpifrance and Dutch entrepreneurial development bank FMO. Both partners bring decades of entrepreneurial and operational experience to the table: prior to joining Breega, Lubega was co-founder of edtech unicorn Go1, while Faniro Dada was CEO of Endeavor Nigeria.
Breega plans to invest between $100,000 and $2 million in startups across Africa's four largest markets (Nigeria, Egypt, South Africa and Kenya) as well as French-speaking African markets including Morocco, Senegal, Côte d'Ivoire, Cameroon and the Democratic Republic of Congo. The Africa-focused venture capital firm has already invested in nine startups, including Numida, Hohm Energy, Socium, Krasha, 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 strategy, local market trends and the untapped market potential of the continent. The interview has been edited for brevity.
TC: $75 million is a sizable first fund in any market, especially in Africa. If I understand correctly, the fund is for pre-seed and seed stage startups. But apart from capital, what value does this company offer founders that they can’t find elsewhere?
Melvin: All of Breega's partners and investment team members are former founders and business owners. We know first-hand what it's like to raise funds, launch a business, fail and persevere through tough times. Looking back at my own experience, I struggled to find investors in Africa who launched businesses without raising funds. That's why our goal is to be the investors we wish we had when we were launching our businesses. Many entrepreneurs appreciate having a sparring partner who has been through the same thing. We want to come in very strongly in pre-seed and seed and be the first check for startups leading rounds.
More than a quarter of our team is dedicated to supporting our portfolio companies in a variety of areas, including go-to-market strategy, talent management, governance, brand and communications. This commitment allows us to offer more than just capital; we provide entrepreneurs with experienced sparring partners who bring international experience and ecosystem knowledge. This is not only important for entrepreneurs, but also helps them gain great value from their European experience.
TC: What sectors are Briga interested in in Africa and why?
Tosin: We are focusing on industries such as fintech, healthtech, proptech, logistics and edtech that have the potential to be transformative in solving current and future challenges across the continent, especially as our population grows.
Melvin: Furthermore, you can think of it like a Venn diagram. We target areas where we can make the biggest impact, aligned with the Sustainable Development Goals (SDGs). And Breega has extensive experience supporting over 100 companies. What's particularly useful is that insights from our success in Europe and the US are fed into our approach in Africa, helping us pinpoint where impactful opportunities align with our expertise.
TC: I'm glad you mentioned that because I'm interested to know how Breega avoids and balances the trap of backing US- or European-style companies in Africa.
Tosin: At the end of the day, it comes down to having a local partner who understands the challenges of different markets. My extensive experience in Nigeria and Melvin's extensive experience in South Africa keeps us thinking the same way. We don't invest in companies because they are similar to US or European companies. Our focus is on solutions that solve challenges unique to Africa and its diverse markets. While there are similarities, we are intentional in backing solutions that are tailored to local needs.
One of Breega's strengths is the experience of our European team. They help us understand that Africa is probably in the same situation as Europe was a few decades ago. They have witnessed this evolution, and we are already on a similar path. This perspective allows us to recognize that this is a journey and an evolution, but also pay attention to the current state of the market and the solutions that are needed today.
From left: Ben Murrell (Co-founder and CEO of Breega), Tosin Faniro Dada (Partner), and Melvin Lubega (Partner). Image courtesy of Breega
Ben: I think what Tosin said is really important. I spend a lot of time with our team in Africa, so we haven't put a team and fund there that operates separately from our main operations. No, it's fully integrated into our culture, team dynamics and overall company strategy. We understand that these markets are unique, and we're not going to support the same types of companies everywhere. We're very conscious of this and are applying our knowledge of what has worked and what hasn't worked.
TC: What is Breega’s approach to investing in specific markets in Africa versus other markets?
Melvin: We don't want to invest only in the Big 4 countries (Nigeria, South Africa, Egypt, Kenya) because we understand that talent is equally distributed. That's why we invest in other markets like Uganda, Guinea, and Francophone Africa. This is especially important because we have deep roots in these 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: Lately, VCs have been going more pan-African and looking to invest in largely untapped markets. As you say, such an approach is crucial to finding the next wave. But such success is rare. So why do VCs prioritize breadth over depth in the largest markets where there is more potential for scalable business?
Melvin: The reality is that Africa gets 1% of venture capital but 18% of the population is in Africa, so from that perspective, our role as Breega, a top-tier investor in Europe and Africa, is to go where others honestly can't go because we believe that's where value is created.
If you think about the ecosystems that we serve, there are some very attractive regions that don't attract venture capital, and we're investing in the continent for the long term, so we're consciously making the case that our role as investors is to facilitate certain ecosystems.
And as you say, there wasn't a lot being said about Senegal before Wave. What you need as an investor is to go beyond following the crowd and understand what fundamentally good investments look like in the early stages and be able to leverage that experience to get there.
TC: Would you say that this model has worked well for Breega, which has been investing in Europe for almost a decade?
Ben: I think so. The advantage of people who start businesses in small countries is that they usually start thinking globally from day one. And those are the founders we're looking at right now.
It's not just the talent that matters, but the markets the founders enter. It's rare to build a large business in a small country, so a multi-country strategy is key. As long as there are international expansion plans, we are actively supporting founders from small African countries. This approach has been successful in Europe, and we are applying the same strategy in Africa.
TC: Where do you see the VC industry in Africa right now in terms of co-investment opportunities?
Melvin: Many investors who are only investing in Africa or in specific countries are focusing on their current portfolio companies and investing less in start-ups. Similarly, many investors do not have the capital to invest. When we look at follow-on rounds and extended series of rounds, we see many smaller funds struggling to participate meaningfully. And I think it's a change of times.
Tosin: I think well-known name investors are still actively investing across a variety of stages and markets, but they seem to be more cautious than they were a few years ago, especially when it comes to the entrepreneurs they invest in.