The Derry-based housebuilder was the first company in Northern Ireland to receive investment from BGF in November 2015.
It will use the new funding to support the development of residential properties across multiple sites.
Joe McGinnis, managing director at Braidwater, said: “We are delighted that BGF has chosen to follow its initial investment in the company after working closely with us over the past two years.
“BGF’s long-term approach and its input to the business has been invaluable for our development.
“The investment will help Braidwater to pursue continued growth across Northern Ireland and also to increase awareness of the business in and around Belfast.”
The company’s staff headcount has increased from 12 to 46 in only a few years.
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The housebuilder will break ground at as many as three new sites in 2018, including one in the Greater Belfast area.
Braidwater has built two- to five-bedroom family homes for more than 40 years.
Patrick Graham, investor at BGF, added: “Since BGF invested a little over two years ago, Braidwater has increased its turnover by a multiple of five to almost £25m.
“It was, therefore, no surprise that the company required a sizeable follow on investment to enable it to continue on that growth trajectory.
“We have built a strong relationship with Joe and his team during an exciting period for Braidwater, which has seen strong demand for high-quality family homes continue.
“The team has continued to successfully develop its pipeline of land for development in Northern Ireland and we are confident that they have the expertise to deliver on those new opportunities.”