Breega, known for its five Europe-focused early-stage funds supporting startups like Alice&Bob, Moneybox, and Curve, has secured $52m for its new $75m African fund, with the final close expected by year-end.
The firm has expanded its presence by opening offices in Lagos, Nigeria, and Cape Town, South Africa.
With the new fund, Breega aims to invest in major African startup hubs like Nigeria, Egypt, South Africa, and Kenya, as well as Francophone countries including Morocco, Senegal, Ivory Coast, Cameroon, and the Democratic Republic of Congo.
Breega plans to issue seed-stage investments of $100k to $2m, reserving 30-40% of the fund for follow-on rounds.
The fund is supported by high-net-worth individuals, tech entrepreneurs, and institutions like French public bank Bpifrance and Dutch development bank FMO.
Focusing on Africa’s fundamental needs.
In the past two years, Breega has invested in nine African startups, including Kenyan fintechs Sava and Kwara, as well as Ugandan digital loan provider Numida. According to Breega cofounder Ben Marrel, the firm is eager to continue expanding its investments.
According to UNICEF data, Africa’s population is projected to grow from nearly 1.5 billion to 2.5 billion by 2050, presenting a significant investment opportunity, says Marrel.
Marrel emphasizes, “There is no way this growth can be managed without technology. You need to feed, house, educate, and care for these people, among other needs.”
“We are highly focused on addressing the core needs that Africa is about to face.”
The fund will focus on investments in agritech, edtech, and healthtech, as well as technologies supporting critical infrastructures needed across the continent, including fintech, logistics and mobility, and energy and climate.
Marrel acknowledges that this approach comes with challenges.
He explains, “When you’re a European or US business, you’re often competing against incumbents who are doing things the traditional way, while you’re trying to introduce a new digital approach.”
He adds, “In Africa, many times, you’re building the market from the ground up.”
For example, fintechs face the challenge of cash payments’ dominance across the continent. However, Marrel believes this also presents the opportunity for greater rewards.
“It’s harder at the start, but the impact you can make in terms of experience is so much greater that you become the go-to solution with no competition,” he says.
“Once you’re at that stage, the opportunities are endless.”
Africa’s inmovation sphere
Africa’s tech sector has experienced remarkable expansion in recent years, with startups across the continent securing $3.3 billion in 2022, a sharp increase from $195 million in 2017, according to a Disrupt Africa report.
In 2023, investments dropped to $2.4 billion due to the global economic downturn, marking the first time since 2017 that annual funding growth fell below 40%.
Marrel notes that although the ecosystem has achieved a “minimum threshold” of funding, it is still limited. Local VCs typically manage $10-20 million funds, while US and European investments remain sluggish.
Only a few European VCs focus on African startups. French VC Partech has run a $300m Africa-focused growth fund since 2017, while Stockholm-based Norrsken recently launched a $205m fund targeting the continent.
“It’s uncommon to find a focused strategy with a dedicated fund and local presence,” says Marrel, noting it also reduces competition for quality deals.
Breega has two partners already based in Africa: Melvyn Lubega in Cape Town and Tosin Faniro-Dada in Lagos, who will now oversee the firm’s operations in these new offices.
The VC anticipates expanding its Africa-based team to as many as six people in the future.
