The news:
- South Africa-based startup accelerator, Founders Factory Africa, is rebranding as 54 Collective, a venture capital (VC) firm with a $40 million fund to support early-stage African startups across sectors.
- The new 54 Collective joins the rank of local investors like Partech bridging the gap to keep capital flowing to startups in Africa.
- The firm plans to invest in 105 venture-bankable startups in five years starting from 2023, at the rate of 21 businesses per year. 51 Collective claims it’s currently at 29 startups, with its eyes set on 42 by the end of 2024.
On the new development, Bongani Sithole, Cofounder and CEO of 54 Collective, told TechCabal, “Today, we are a VC firm with a $40m fund. Alongside that, we have $107 million that is backing our venture success platform. In total, if you add the $107 million and the $40 million fund, we are almost on the north of $150 million that we are managing in supporting startups and also making investments.”
Following the end of the zero-interest rate period, several foreign investment outfits scampered out of Africa. Consequently, venture capital inflows to the continent fell significantly by 31% to $4.5 billion in 2023.
According to London-based African Private Capital Association, equity and debt deals dropped from 781 in 2022 to 545 in 2023, marking a 30.22% decline. With this news, 54 Collective, founded in 2018 by Roo Rogers and Alina Truhina, is stepping up to ensure capital inflow for startups in Africa continues.
The firm plans to take a board seat in all the early-stage companies it invests in to help manage operational risks and support startups to focus on what matters — building the product and growing the customer base.
As a full-fledged VC, the firm now has more room to expand its scope and attract more investors, than it did as an accelerator.
Depending on the business’s stage, 54 Collective invests up to $250,000 and provides non-dilutive capital (financing that enables startups to retain full ownership of their company) of up to $150,000. This rebranding news comes a year after 51 Collective raised $114 million to provide operational support for its investments across the continent and address gender imbalance in the VC ecosystem. The Mastercard Foundation and Johnson & Johnson Impact Ventures contributed to the round.
