Paris-based VC Breega, an early backer of quantum startup Alice & Bob and French unicorn Exotec, has announced a new €150m early-stage fund — with a strong focus on UK startups.
“With this fund, we really wanted to take the Breega brand — which is still predominantly French and based in Paris — and expand that so that we had a good pan-European approach,” says Dan Shellard, UK partner at Breega.
Around a third of the new fund, which has closed just over €75m so far, will be invested in British startups.
“The UK continues to be the best-performing ecosystem, London in particular,” says Shellard. “We want to make sure we are backing the best founders.”
Gaining a foothold in the UK
Breega already has a foothold in the UK; it opened an office in London in 2020, and has five people on the ground there already. Of 100 portfolio companies, 13 are based in the UK — including fintechs Moneybox and Curve.
By 2024, Shellard says, the London team should be eight-strong.
Breega also has an office in Barcelona, and Shellard says it’s likely to expand to another European country in the next year.
The new fund will back companies in five key verticals: software, fintech, deeptech, the future of work and climate tech. Breega plans to invest in around 30 startups from the fund over the next three to four years, writing tickets ranging €500k-€3m.
This is Breega’s third early-stage investment vehicle since it launched in 2015. It also has a later-stage fund of €250m to invest at Series A and B.
A team of operators
Despite a cooler market for early-stage VC, Shellard says that now is a good time to find future portfolio champions. “Often you’ll find that the best vintages are created in times when the market is a bit depressed,” he says.
That doesn’t make it easy to raise a fund, however.
Breega emphasises its team’s operational expertise to LPs, says Shellard. It has a team of eight people dedicated to helping early-stage companies with the typical pain points that come with scaling — ranging from recruitment and marketing to designing a robust go-to-market strategy.
Everybody on the investing team is also an ex-founder or senior operator. Shellard himself cofounded connected sports app Fiiit.tv and web personalisation company Qubit.
“When I speak to founders and tell them about the fact that I’ve spent nearly 15 years doing what they’re doing [...], they feel like they can have a more open and transparent conversation,” says Shellard.
“Having that relationship with founders is really important and allows us to win important deals and then coach them through the journey.”
Article 8 fund
The new fund is classified as “Article 8” under the European Union’s Sustainable Finance Disclosure Regulation (SFDR). This means that Breega has to show that portfolio investments “promote” ESG characteristics, without having to make sustainability an objective for the fund.
In practice, Shellard says that every investment will go through the firm’s ESG committee to be scored out of five. Any company falling below three will be red-flagged and the firm is aiming to keep the majority of the portfolio above a score of four.
