In what has been described by a high court judge as an “abuse of process,” a $106.5 million fund backed by the MasterCard Foundation, intended to support hundreds of African startups, has collapsed, leading to a court-ordered liquidation. The entity, Africa Founders Ventures (AFV), which had recently rebranded to the high-profile 54 Collective, is now being wound up, leaving the startups it was meant to fund in limbo and raising serious questions about financial oversight and the use of charitable funds.
The South Gauteng High Court in Johannesburg placed AFV into provisional liquidation on July 4, 2025, after a legal battle initiated by its primary and sole funder, the MasterCard Foundation. The judgment paints a damning picture of financial mismanagement, contractual breaches, and a deliberate attempt to misuse insolvency proceedings to block the Foundation from recovering its money.
Here’s a detailed breakdown of what went wrong.
A Grand Vision Unravels
In December 2022, the MasterCard Foundation, a major global philanthropic organization, entered into a grant agreement with Africa Founders Ventures NPC, a South African non-profit company. The Foundation committed $106.5 million over five years to be disbursed by AFV.
The mission was clear and strictly defined: provide funding and support to small, medium, and micro-sized enterprises (SMMEs) across Africa on a non-profit, philanthropic basis. The agreement, governed by Canadian law to protect the Foundation’s charitable status, explicitly stated that the funds were a “gift” to be used exclusively for specified charitable activities.
By early 2024, the Foundation had transferred over $42.2 million to AFV in two tranches. However, by the middle of that year, the relationship began to sour.
The Rebrand and the Red Flags
The first major point of contention arose in August 2024 when the Foundation became aware that AFV was using grant money for an unapproved and costly rebranding campaign to become “54 Collective.”
The Foundation’s concerns, detailed in court documents, were twofold:
- Misuse of Funds: AFV spent $689,931 of the grant money on the rebrand without authorization.
- Conflict of Interest: The new “54 Collective” brand was also being used by Founders Factory Africa (FFA), a for-profit company run by the same key individuals as the non-profit AFV. The court documents note, “FFA engages in for-profit activities including activities under the ‘Utopia’ brand.”
This co-mingling of branding was a direct violation of the grant agreement, which was designed to ensure the Foundation’s charitable programming remained entirely separate from any for-profit ventures. The Foundation worried that the goodwill and reputation built with its charitable funds would be improperly transferred to commercial entities.
After initially pushing back, AFV acknowledged its error in October 2024 and, in February 2025, explicitly confirmed its willingness to repay the rebranding costs. However, it never did.
A Look Inside the Books: The Deloitte Investigation
Growing suspicious, the MasterCard Foundation appointed Deloitte in late 2024 to inspect AFV’s books. What they found raised immediate alarms:
- No Audited Financials: AFV had failed to produce audited financial statements for both the 2023 and 2024 fiscal years.
- Suspicious Accounting: Investigators discovered nearly 2,000 “adjusting journal entries” made to the books in March 2025, just as the investigation was underway. The court noted this called “into question the accuracy and reliability of the entries in the books and records of AFV.”
- Questionable Transactions: A preliminary review of bank statements revealed an aggregate transfer of $4.59 million from the non-profit AFV to the for-profit company, FFA. The Foundation stated it would never have approved such a transfer due to its charitable status.
- Lack of Competency: AFV’s own auditors, PwC, attributed the accounting chaos to an “inadequate adoption” of reporting standards and a “lack of financial competency within its financial function.”
During this period, AFV restricted Deloitte’s access to its accounting software, further fueling the Foundation’s concerns.
From Termination to a “Bogus” Business Rescue
With the relationship broken beyond repair, the MasterCard Foundation formally terminated the grant agreement on January 30, 2025, giving a 90-day notice period. Under the terms of the agreement, this meant AFV was obligated to return all unused funds — the “Remaining Grant” — to the Foundation. At the time of the investigation, Deloitte had identified approximately $6.17 million still held in AFV’s bank accounts.
Instead of arranging to return the funds, AFV’s directors took a different path. On March 27, 2025, they secretly passed a resolution to place the company into business rescue — a legal process in South Africa intended to help financially distressed companies rehabilitate.
Crucially, they failed to notify the MasterCard Foundation, their only funder and creditor, until nearly two weeks later. The appointed Business Rescue Practitioner (BRP), Barry Urban, then informed the Foundation that AFV would be “wound down” and, critically, refused to recognize the Foundation as a creditor, which would have prevented it from voting on the company’s future.
The Court Steps In: “An Abuse of Process”
The MasterCard Foundation filed an urgent application with the High Court to set aside the business rescue proceedings and place AFV into liquidation.
The judgment, delivered by Acting Judge Johann Gautschi, was scathing. He concluded that:
- The business rescue was a “nullity” because AFV had failed to notify its main creditor as required by law.
- The proceedings were an “abuse of process,” used not to rescue the company but as a tactic for an “improper wind-down.”
- There was “no reasonable prospect” of rescuing AFV, as it was factually insolvent and had no other source of income besides the now-terminated grant.
- The BRP’s conduct was aimed at preventing the Foundation from exercising its rights to reclaim the “Remaining Grant.”
The court set aside the business rescue and ordered the provisional winding-up of AFV, stating it was the only just and equitable outcome.
What Happens Now?
Following the liquidation order, an independent liquidator will assume control of AFV/54 Collective’s assets. Their mandate includes identifying and securing all remaining funds and property, investigating the company’s financial dealings — particularly questionable journal entries and inter-company transfers — and distributing any recoverable assets to creditors.
The provisional liquidation process will continue, with a final court hearing scheduled for 11 August 2025.
Meanwhile, the Mastercard Foundation, the initiative’s sole funder, is pursuing arbitration in Canada to recover allegedly misused grant funds. The South African court has also ordered punitive costs against AFV and its business rescue practitioner (BRP), citing mala fide conduct.
The collapse of 54 Collective serves as a stark warning for nonprofits and grant-funded initiatives: robust governance is not optional. Despite significant financial backing, the absence of oversight and accountability has derailed a high-profile programme and cast doubt over its impact.
For now, 54 Collective’s website remains offline, its LinkedIn page dormant. The initiative’s future — and that of the entrepreneurs it aimed to support — is uncertain. The committed funding is now entangled in legal proceedings, with the Mastercard Foundation holding a clear contractual and proprietary claim over unspent capital.
For the African startups that were promised support, the fallout has been severe. A meaningful pool of funding has evaporated, and with it, confidence in how large-scale grant programmes are administered in the ecosystem.