Founders Factory Africa, a leading venture capital firm in Africa, has rebranded itself to 54 Collective, unveiling a new chapter in their investment strategy.
The firm announced that it will now offer up to $500,000 in equity and non-dilutive capital to early-stage technology ventures across Africa.
The firm will also evolve from an accelerator to a full-fledged Venture Capital (VC) firm with 70 specialists tasked with collaborating with startup founders in mounting obstacles such as currency devaluation and unfavorable regulation, imminent in the African ecosystem.
According to the CEO, Bongani Sithole, 54 Collective as a VC would focus on early-stage startups – before the Series A stage.
“We have learnt that capital that is dilutive alone isn’t enough for early-stage startups. At that stage, you’re still learning and losing a lot of ownership through equity, which is not good for the market or the founder,” Sithole said in an interview.
Founders Factory has an active portfolio of over 50 ventures across 10 countries. To date, the firm has supported more than 70 ventures and helped its portfolio startups raise nearly $140 million in follow-on capital.
Since it was established in 2018, the firm has played a crucial role in the development of innovation by providing support services to entrepreneurs. It also relied on a corporate-backed model that saw it invest in 57 businesses across the agri-tech, health-tech, and fintech triumvirate.
Going forward, 54 Collective will seek to support founders across various industries, addressing a wider range of challenges on the continent.
“We are pursuing opportunistic investments in different sectors across the continent where there are uniquely large opportunities for startups to scale and create sustainable impact,” Sithole explained.
The firm has set an ambitious goal of investing in 105 startups across Africa over the next five years.
Startups across Africa raised $780 million between January and June 2024 (H1 2024), a 31% decline compared to H2 2023 figures and an even starker 57% decline compared to H1 2023.
REPORT | Funding to African Startups Declines Over 50% YoY to $780 Million in H1 2024
The decline in startup funding continues the downtrend witnessed in 2023 when Africa’s technology startups raised a total of $3.5 billion across 547 deals representing a 46% decline compared… pic.twitter.com/HDqRSX1Dep
— BitKE (@BitcoinKE) July 5, 2024
The decline in funding continued the downtrend witnessed in 2023 when Africa’s technology startups raised a total of $3.5 billion across 547 deals, a 46% decline compared to the previous year [2022].
REPORT | Francophone Africa Was the ONLY African Region to Demonstrate YoY Growth in Number of Deals and Investor Participation in 2023
🇧🇯 🇨🇮🇳🇪🇹🇬🇧🇫🇬🇦🇸🇳🇬🇳🇨🇩🇲🇱🇨🇫🇨🇬🇨🇲🇹🇩🇬🇶🇧🇮🇩🇯
The region displayed resilience in terms of the number of deals, reaching a total of 93 deals and marking… pic.twitter.com/9gzG9uLEmk
— BitKE (@BitcoinKE) February 6, 2024
The solution, according to Sithole, is to build up local investment through engagement with corporates and high-net-worth individuals. Moreover, supporting older startups to finalize exits will enable them to adequately re-invest in newly born startups and create a repetitive process of growth and support.
“We have to be very intentional as VCs to drive capital to where it is needed most, that is, the nascent marker. We can do this by encouraging entrepreneurs to exit and get that capital recirculating in the ecosystem,” said Sithole.
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