On Tuesday, the South African High Court provisionally liquidated 54 Collective, a venture capital firm focused on African startups, following serious allegations of financial misconduct.
The court’s action included freezing multiple bank accounts after claims that the firm misappropriated a $106.5 million grant from the Mastercard Foundation.
This move marks a dramatic turn for a company once seen as a key player in Africa’s startup ecosystem.
Court action triggered by allegations of fund misuse
The liquidation order resulted from accusations that 54 Collective improperly diverted substantial funds intended to support startup ventures.
The Mastercard Foundation specifically alleged mismanagement of over $42 million disbursed between 2023 and 2024, leading to a forensic audit and legal proceedings.
The court’s decision to freeze bank accounts aims to preserve remaining assets during an ongoing investigation.
Despite these allegations, Bongani Sithole, former CEO of 54 Collective, denied any wrongdoing.
In a statement released on the announcement day, Sithole said, “The grant was not terminated due to a breach,” challenging claims that financial misconduct led to the firm’s operational halt.
However, the shutdown followed the earlier loss of Mastercard Foundation backing, which had supported various initiatives, including the venture studio, Gen F accelerator, and the Entrepreneur Academy.
Impact on African startup ecosystem and workforce
54 Collective, formerly Founders Factory Africa, had fostered African entrepreneurship, supported over 40 startups, and created around 17,500 jobs across the continent.
Its partnership with the Mastercard Foundation was crucial in funding programs that awarded grants to small and medium-sized enterprises.
The firm’s closure threatens to disrupt ongoing support for these ventures and may affect those relying on its multi-million dollar pool aimed at gender equity and portfolio company stability.
Earlier in 2025, 54 Collective announced the shutdown of its startup studio and anticipated job cuts due to the inability to secure alternative funding after the Mastercard agreement ended in April.
While the firm’s $40 million fund, UAF1, was reported as unaffected, the provisional liquidation brings uncertainty to its operational future and its ability to continue investments.
This ongoing case highlights the challenges venture capital firms operating in emerging markets face, where governance and fund management are increasingly scrutinised.
The South African court’s decisive action underscores the sector’s demand for transparency and accountability.