Venture studio associated with 54 Collective (previously known as Founders Factory Africa) ceases operations amidst disagreements with Mastercard Foundation.
In a significant development for the African tech ecosystem, 54 Collective, formerly known as Founders Factory Africa, has shut down its venture studio operations following a court-ordered liquidation. The move comes in the wake of allegations of financial mismanagement related to a $106 million grant from the Mastercard Foundation[3][4].
The legal dispute arose after Mastercard Foundation terminated its grant following uncovered financial red flags and misuse of funds during a rebranding effort that was interpreted as a failed cover-up of these issues[2][3]. Despite the shutdown, 54 Collective’s separate $40 million venture fund (UAF1) survives but now operates under a cloud of uncertainty and diminished credibility[2].
The closure of 54 Collective has dealt a severe blow to the African tech ecosystem by abruptly cutting off critical funding, support, and resources to over 40 portfolio startups that depended on the firm’s venture studio, accelerator, and entrepreneurial programs[1][2][3]. This has occurred amid a backdrop of declining African tech funding overall, further tightening capital availability and raising investor concerns about governance and transparency in African venture firms receiving large grants[1][3].
The misuse of funds by 54 Collective involved the use of charitable grant money from the Mastercard Foundation for its rebrand[3]. CEO Bongani Sithole has denied wrongdoing and argued the fund’s closure was not due to a breach of agreement, but the matter remains in court with a final decision expected by mid-August 2025[1].
The African operations of Founders Factory were initially in partnership with Standard Bank and were launched in Johannesburg in 2018[5]. In 2015, Founders Factory was launched in London[6]. Last August, Founders Factory rebranded and changed its name to 54 Collective, a move that was funded by restricted charitable grant money from the Mastercard Foundation[7].
In 2023, Founders Factory secured an additional US$114 million in funding from Mastercard Foundation and Johnson & Johnson[8]. The funding was used to scale Founders Factory’s model to better serve founders across the African tech ecosystem[9]. The partnership between 54 Collective and the Mastercard Foundation was terminated earlier this year, resulting in some job losses[10].
Netcare provided a platform for entrepreneurs to build and scale e-health startups in Africa through Founders Factory[11]. Small Foundation also invested in agri-tech through Founders Factory's African operations[12]. The court rulings did not specify the exact amount of misused funds by 54 Collective[3]. The court-ordered liquidation of Africa Founders Ventures (AFV), an operating entity of 54 Collective, occurred due to the misuse of funds[13].
The scandal highlights urgent governance and oversight challenges in Africa’s venture ecosystem, likely prompting tighter controls on future philanthropic and investment funds[1][3]. As one of the most prominent venture capital disruptions in Africa in recent years, it casts a cautionary shadow over future large-scale investments in the continent’s startup ecosystem.
- Entrepreneurs in the African tech ecosystem may find it challenging to secure funding and resources, as the shutdown of 54 Collective (formerly Founders Factory Africa) has left over 40 portfolio startups without critical support.
- The misuse of charitable grant money from the Mastercard Foundation to fund the rebranding of 54 Collective (previously Founders Factory Africa) has raised concerns about financial management and transparency among African venture firms, potentially dissuading future philanthropic investors.
- Technology-focused e-health startups in Africa may face hurdles in securing funding and support, as one of their primary platforms, Netcare, was provided by Founders Factory, the African operations of which have been embroiled in a financial scandal.
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