In February 2025, over 40 employees of 54 Collective—previously known as Founders Factory Africa—were abruptly laid off following the collapse of the venture studio. The shutdown came as a shock to Africa’s tech community, particularly given the firm’s ambitious plans to fund 105 startups over five years and its position as the continent’s most active tech investor in 2024. The cause was the termination of a major funding agreement by the Mastercard Foundation, which had contributed over $100 million to the studio’s operations.
From Ambition to Legal Dispute
Founded in 2018 as the African arm of the UK-based Founders Factory, the venture studio partnered with Standard Bank, Netcare, and Small Foundation to support startups across healthtech and agri-tech. In 2023, it rebranded as 54 Collective after securing $114 million from Mastercard Foundation and Johnson & Johnson to expand its model. The rebrand aimed to reflect a broader pan-African identity and a shift toward blended finance, but it would later become the catalyst for a major legal dispute.
The Rebrand That Sparked a Crisis
Court documents show Mastercard Foundation objected to the rebrand, which it claimed was not approved under the original grant agreement. Concerns intensified when the Foundation discovered links between Africa Founders Ventures (AFV)—the nonprofit entity managing the funds—and for-profit affiliates like Founders Factory Africa and Utopia Capital, where key AFV executives also held leadership roles. By August 2024, the Foundation formally withheld consent for the rebrand, citing fears that restricted funds could be diverted to commercial entities.
Financial Irregularities Emerge
A forensic review conducted by Deloitte uncovered several red flags, including over 2,000 backdated journal entries, missing audited financial statements for 2023 and 2024, and a $4.59 million transfer from AFV to an FFA-controlled account. Despite an initial agreement to refund $689,931 in rebranding expenses, AFV later reversed its decision, calling repayment “reckless.” Mastercard Foundation escalated the issue, demanding full financial disclosure and ultimately filing a termination notice in January 2025.
Failed Rescue and Legal Fallout
In March 2025, AFV filed for business rescue in South Africa—a move akin to bankruptcy protection—without notifying Mastercard Foundation within the required five-day window. The appointed rescue practitioner soon revealed that the organisation planned to wind down rather than restructure, earmarking over $3 million in grant funds for severance and liabilities. However, $1 million of that amount could not be fully accounted for, prompting the Foundation to seek a court order to freeze AFV’s assets.
Court-Ordered Liquidation Ends 54 Collective
After failed attempts to regain control of the remaining funds, Mastercard Foundation filed an urgent court application on May 14, 2025, to halt the business rescue and initiate formal liquidation. The court approved the request, bringing 54 Collective’s operations to an end and formally dissolving AFV. Employees were laid off without severance, and the studio’s ambitious efforts to scale Africa’s tech ecosystem came to an abrupt halt.
A Blow to Startup Funding in Africa
The shutdown has had ripple effects across the continent’s tech ecosystem. At a time when African tech funding had already declined by 7% in 2024, the loss of one of the few large-scale venture backers further constrains access to capital. Portfolio companies that relied on 54 Collective for funding and strategic support now face significant uncertainty, raising concerns about the viability of donor-backed venture models.
The demise of 54 Collective illustrates the fragile balance between philanthropic capital and venture building in emerging markets. While donor funding can unlock scale and impact, inadequate oversight and blurred lines between nonprofit and commercial entities pose significant risks. As courts prepare a final ruling in August, the case serves as a cautionary tale for both funders and founders navigating Africa’s evolving startup ecosystem.