Founders Factory Africa, a prominent startup accelerator, is undergoing a significant transformation as it rebrands to 54 Collective and transitions into a full-fledged venture capital (VC) firm. The move aims to expand its financial and capacity-building support to early-stage startups across Africa.
With a team of 70 specialists, 54 Collective will provide comprehensive support to entrepreneurs navigating the complex African startup ecosystem, which is often characterized by currency fluctuations and challenging regulations. The VC firm will invest between $200,000 and $500,000 in early-stage startups, before they reach the Series A funding stage.
“We’ve realized that capital alone isn’t sufficient for early-stage startups,” said Bongani Sithole, CEO of 54 Collective. “They’re still learning and losing ownership through equity. Our focus on non-dilutive loans and additional support for women-led founders will address this.”
Since its inception in 2018, Founders Factory Africa has played a pivotal role in nurturing innovation, backing 57 startups primarily in agriculture, health, and finance. However, the firm identified a need to deepen its impact and broaden its support beyond acceleration services.
“We’re narrowing our sectoral focus to concentrate on early-stage startups where our support can make a more significant difference,” Sithole explained. “By offering non-dilutive loans and prioritizing women-led ventures, we aim to empower entrepreneurs and contribute to a more inclusive ecosystem.”
Africa’s startup landscape has witnessed substantial growth in recent years, with over $6 billion invested in the past decade. However, the continent still lags behind other regions in terms of startup funding, particularly for early-stage ventures.
54 Collective aims to address this gap by increasing local investment through partnerships with corporations and high-net-worth individuals. Moreover, the firm emphasizes the importance of fostering a cyclical ecosystem where successful startups reinvest in the next generation of entrepreneurs.
“We need to encourage entrepreneurs to exit their businesses and recirculate capital within the ecosystem,” Sithole said. “By learning from the resilience of traditional MSMEs, we can build a stronger foundation for tech-enabled ventures to thrive.”
While the past few years have been challenging for African startups due to global economic factors, Sithole remains optimistic about the continent’s long-term potential. He believes that by combining the agility of tech startups with the reach of traditional businesses, Africa can unlock significant economic opportunities.
With a $40 million fund and additional resources, 54 Collective is poised to become a leading player in Africa’s startup ecosystem. By providing comprehensive support and focusing on early-stage investments, the firm aims to empower entrepreneurs and contribute to the continent’s economic growth.