A South African High Court has provisionally liquidated 54 Collective—formerly known as Founders Factory Africa—after damning revelations of financial misconduct involving a $106.5 million grant from the Mastercard Foundation.
The court action, which froze more than a dozen bank accounts held across Nedbank, Standard Bank, and Investec, follows a forensic audit that uncovered improper use of restricted grant funds, unauthorised financial transfers, and attempts to shield assets from repayment.
Grant Mismanagement and Rebrand Controversy
Court filings and a Deloitte investigation revealed that over $4.59 million in restricted funds were diverted from Africa Founders Ventures (AFV), the non-profit arm of 54 Collective, to its for-profit sister entity. Additionally, around $689,000 was used to finance an unapproved rebrand to “54 Collective” between July and August 2024—an action deemed in violation of the original grant agreement.
Business Rescue Plan Dismissed as a “Ploy”
In a further blow, the High Court rejected a “business rescue” application lodged by AFV in April 2025, which was intended to block creditor claims. Justice Johann Gautschi labelled the move a “blatant disregard for the law,” asserting it was designed to improperly safeguard $6.1 million in remaining funds.
Barry Urban, the appointed Business Rescue Practitioner, was held personally liable for legal costs incurred by the Mastercard Foundation.
Forensic Audit Exposes Deep Governance Failures
Deloitte’s audit of AFV’s 2023–24 records uncovered more than 2,000 adjusting journal entries used to manipulate accounting reports and conceal discrepancies. The company failed to submit audited financials for two years, with PwC refusing to sign off due to “a lack of competent financial management.”
The audit further exposed weaknesses in internal controls, prompting Mastercard to terminate the grant in January 2025 and pursue international arbitration in Toronto, Canada, under Ontario law.
Ripple Effects Across Africa’s Startup Ecosystem
Once hailed as a pan-African innovation engine, 54 Collective had promised to invest in 105 startups across all 54 African nations. The liquidation has led to the collapse of its venture studio and accelerator arms, impacting dozens of early-stage businesses.
However, its standalone $40 million VC fund (UAF1) remains operational, with support for existing startups reportedly unaffected for now.
What’s Next?
A final liquidation hearing is scheduled for August 11, 2025. In parallel, the Mastercard Foundation’s arbitration proceedings in Canada aim to recover misused grant funds and enforce accountability.
This case is a stark reminder of the urgent need for financial transparency, governance reform, and due diligence in philanthropic–venture partnerships operating across Africa’s dynamic startup landscape.
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