After four years of accelerating startups across the continent, Founders Factory Africa has rebranded as 54 Collective, a sector-agnostic venture capital firm with a $40 million fund dedicated to investing in early-stage African ventures.
“Today, we are a VC firm with a $40 million fund. In addition, we have $107 million backing our venture success platform. Altogether, we’re managing nearly $150 million to support startups and make investments,” Bongani Sithole, CEO of 54 Collective, told TechCabal.
This transition comes at a crucial time for African startups, which saw venture capital inflows decline by 31% in 2023 to $4.5 billion as foreign investors pulled back after the end of the zero-interest rate period. The number of equity or debt deals also dropped to 545 from a record 781 in 2022, according to a report by the London-based African Private Capital Association. Many industry observers have called for local venture capitalists with deep knowledge of the continent to fill the gap left by departing foreign investors.
54 Collective now joins the ranks of local investors like Partech that are stepping up to ensure capital continues to flow to African startups.
While building Founders Factory Africa, Sithole identified a common reason many tech companies fail after raising capital: they often delay setting up a board, or when they do, they view it merely as a reporting structure rather than leveraging it for strategic advice.
“We’ve seen too many examples where startups hire and spend money too quickly, with the focus on products and customers taking a back seat,” Sithole said.
To address these challenges, 54 Collective takes a board seat in the early-stage companies it invests in, helping to mitigate business risks and enabling startups to concentrate on product development and customer growth. Additionally, 54 Collective assists its portfolio companies in hiring talent.
Founded by Roo Rogers and Alina Truhina, 54 Collective’s evolution into a venture capital firm was driven by a substantial $114 million capital raise from the Mastercard Foundation and Johnson & Johnson Impact Ventures in 2023.
Initially, the company planned to use this funding to expand its model to support founders across the African tech ecosystem. However, transitioning into a full-fledged venture capital firm has allowed 54 Collective to broaden its scope and attract more investors. Previously, as an accelerator, its revenue model was limited, but as a VC firm, 54 Collective has more flexibility.
The firm invests up to $250,000 in startups, depending on the business’s stage, and offers non-dilutive capital of up to $150,000. This non-dilutive capital, provided as a loan with a 5% interest rate, allows startups to retain full ownership of their company.
“In the next five years, starting from last year, we aim to invest in 105 venture-bankable startups. Each year, we plan to support 21 businesses. By the end of this year, we will have reached 42 startups. Currently, we are at 29,” Sithole said.
