Africa-focused venture capital firm 54 Collective, formerly known as Founders Factory Africa, is set to shut down its venture studio operations as its partnership with the Mastercard Foundation comes to an end in two months. The impending closure is expected to result in job cuts, marking a significant shift in the firm’s operations across the continent.
The venture studio, which has played a crucial role in incubating early-stage start-ups, has been operating alongside the Gen F accelerator and the Entrepreneur Academy, both backed by the Mastercard Foundation. However, with the foundation’s financial support set to expire on April 30, 54 Collective has been unable to secure alternative funding to sustain these initiatives.
Despite the shutdown, 54 Collective has confirmed that its $40 million venture capital fund, UAF1, remains unaffected and will continue to invest in African start-ups. Additionally, a multi-million-dollar fund raised in 2023 to support portfolio companies and gender equity initiatives will continue operating as planned.
The firm, with hubs in Johannesburg, Nairobi, and Lagos, has been a key player in Africa’s start-up ecosystem. Some of the Kenyan start-ups in its portfolio include BuuPass, an online ticket-booking platform; fintech firms Lipa Later and Zanifu; and agri-tech ventures Shamba Pride and VunaPay. The closure of the venture studio could impact early-stage start-ups that rely on its funding and mentorship.
Since its inception, the partnership between 54 Collective and the Mastercard Foundation has supported over 40 start-ups and contributed to the creation of more than 17,500 direct and indirect jobs across Africa. The Entrepreneur Academy, another initiative under this collaboration, has also provided 600 grants to small and medium-sized enterprises (SMEs), helping them scale and grow.
The decision to close the venture studio underscores the challenges faced by start-up ecosystems in Africa, particularly in securing sustained funding. While venture capital remains active on the continent, many incubators and accelerators depend on partnerships with major foundations and institutional investors to remain viable.
54 Collective’s restructuring highlights the shifting landscape of venture funding in Africa. With the firm continuing to operate its venture capital fund, it remains to be seen how it will adapt its strategy to maintain support for African entrepreneurs in the absence of its venture studio.
As the April 30 deadline approaches, the industry will closely watch how affected start-ups navigate this transition and whether new funding opportunities emerge to fill the gap left by the Mastercard Foundation’s exit.
