Grantee organization under threat of dissolution due to misappropriation of funds from Mastercard Foundation
54 Collective Under Provisional Liquidation: Allegations of Financial Misconduct and Mismanagement
The South African-based venture capital firm, 54 Collective, has been provisionally liquidated by a High Court following serious allegations of financial misconduct related to a $106.5 million grant from the Mastercard Foundation.
The dispute between the two parties began in 2023 when the Mastercard Foundation disbursed over $42 million to 54 Collective's operating entity, Africa Founders Ventures (AFV), across 2023 and 2024. However, concerns arose when the Foundation discovered that its charitable funds were potentially benefiting for-profit entities, including Founders Factory Africa and Utopia.
The Mastercard Foundation's concerns were heightened when it was revealed that AFV had undertaken an expensive rebranding campaign, costing almost $700,000, which the Foundation believed was an inappropriate use of charitable funds. In response, the Foundation terminated the grant agreement with AFV on January 30, 2025, demanding the return of all remaining funds and repayment of $689,931.46 for the unauthorized rebranding campaign.
The dispute escalated further when AFV, under the new name 54 Collective, failed to produce audited financial statements for its fiscal years 2023 and 2024. A forensic audit by Deloitte, appointed by the Mastercard Foundation in December 2024, uncovered numerous financial irregularities, including more than 2,000 backdated journal entries used to distort the financial records of 2023–2024, and the transfer of $4.59 million from AFV accounts to a for-profit entity linked to Founders Factory Africa.
The court's order implies that an independent party will take over the company's affairs while the court decides on permanent closure. The provisional liquidation process aims to recover funds and determine remaining assets but causes significant disruption to the African startup ecosystem, with the shutdown of 54 Collective’s venture studio and accelerator arms impacting many startups and jobs.
Despite the allegations, Bongani Sithole, former CEO of 54 Collective, denied any wrongdoing and stated the grant was not terminated due to a breach. The firm’s standalone $40 million VC fund, UAF1, remains operational for now, although the overall future is uncertain.
A final liquidation hearing is scheduled for August 11, 2025, while arbitration continues in Canada to hold the parties accountable and recover misappropriated funds. This case highlights critical governance and financial transparency issues in venture capital organizations managing philanthropic funds across Africa.
Background
54 Collective, originally Africa Founders Ventures NPC (AFV), was established with a mandate to fund small and medium-sized enterprises across Africa on a non-profit basis. In August 2023, Founders Factory Africa, a for-profit entity, raised $144 million from Limited Partners (LPs), including the Mastercard Foundation. The dispute accelerated in August 2024 when AFV underwent an unapproved rebrand to 54 Collective.
The court found that AFV's own auditor, PwC, attributed delays to an "inadequate adoption" of reporting standards and a "lack of financial competency within its financial function." On March 26, 2025, AFV's board passed a resolution to enter business rescue proceedings, which the court found was an improper attempt to conduct an "informal wind-down" rather than rescue the company. The court ordered more than a dozen accounts held at Nedbank, Standard Bank, and Investec to remain frozen due to concerns over improper fund transfers.
References: [1] "Mastercard Foundation's $106m grant to 54 Collective under probe over financial mismanagement." BusinessTech. (2025, March 31). https://businesstech.co.za/news/finance/609837/mastercard-foundations-106m-grant-to-54-collective-under-probe-over-financial-mismanagement/
[2] "Mastercard Foundation terminates $100m grant to 54 Collective." TechCrunch. (2025, January 31). https://techcrunch.com/2025/01/31/mastercard-foundation-terminates-100m-grant-to-54-collective/
[3] "54 Collective's Bongani Sithole says Mastercard Foundation grant not terminated due to breach." TechCentral. (2025, April 1). https://www.techcentral.co.za/54-collectives-bongani-sithole-says-mastercard-foundation-grant-not-terminated-due-to-breach/
[4] "54 Collective Provisional Liquidation: Mastercard Foundation Grant Under Scrutiny." Africa Business Review. (2025, May 1). https://www.africabusinessreview.com/news/54-collective-provisional-liquidation-mastercard-foundation-grant-under-scrutiny/
The financial misconduct and mismanagement allegations levied against 54 Collective, a South African-based venture capital firm, revolve around its business dealings, particularly with the Mastercard Foundation. The disputes over the $106.5 million grant spanned from 2023 to 2025 and involved questionable uses of charitable funds, such as the expensive rebranding campaign and unauthorized transfers to for-profit entities.
