The decision by Mastercard Foundation to halt its $100 million investment in 54 Collective, Africa’s most active venture capital firm in 2024, has sent shockwaves through the continent’s tech ecosystem. This move comes as African startups struggle to attract Western investors, raising concerns about the sustainability of businesses dependent on foreign philanthropy.
54 Collective, formerly Founders Factory Africa, confirmed in an email to *Rest of World that its partnership with Mastercard Foundation would officially end on April 30, 2025. The firm, which blends venture capital with a venture studio model to support early-stage African founders, will lay off its entire venture studio team. This includes staff handling product development, marketing, human resources, and business growth, according to three senior officials who attended an internal meeting on February 20.
The Mastercard Foundation assured that startups already in 54 Collective’s program would continue receiving technical support until the funding officially ceases next year. “The Mastercard Foundation remains committed to its Young Africa Works strategy to see 30 million young people, especially young women, access dignified and fulfilling work by 2030,” said Daniel Hailu, the foundation’s executive director for pan-African programs.
However, industry leaders warn that this development leaves a significant gap in Africa’s startup ecosystem. Alim Ladha, CEO of South African edtech firm Instill Education, highlighted the immediate impact, noting that many startups funded by 54 Collective might not yet be self-sustaining. “From an ecosystem perspective, we are left with a bit of a vacuum,” he said.
Some African investors argue that this should be a wake-up call for the continent’s tech scene. Iyinoluwa Aboyeji, co-founder of fintech giant Flutterwave and managing partner at Accelerate Africa, criticized African startups’ reliance on global institutions. “It’s time for our ecosystem to stop building on the broken promises and mandates of globalist institutions who would rather keep African founders broke and broken,” he said.
The funding crunch isn’t new. Many Western investors pulled out of Africa in 2022 and have not returned. Tiger Global, which backed five African startups that year, has since stopped investing on the continent. In 2024, overall investment in African startups fell by 25% to $2.2 billion.
Founded in 2018 and headquartered in South Africa, 54 Collective has invested in over 70 startups. The firm partners with major corporations such as Standard Bank, Netcare, and Small Foundation. In August 2023, it secured its largest funding round when Mastercard Foundation and Johnson & Johnson Impact Ventures pledged $114 million to scale its unique VC model. Mastercard Foundation was supposed to contribute $20 million annually over five years, making its withdrawal a major setback.
Despite the funding cut, 54 Collective insists it will continue investing as usual, though it is expected to downsize its core investment team in Kenya, Nigeria, and South Africa.
Mastercard Foundation has played a major role in African entrepreneurship, supporting multiple investment vehicles such as Nigeria’s VestedWorld and Kenya’s Chui Ventures. Meanwhile, Mastercard has invested in large African companies, including Jumia, Airtel Africa, and MTN Mobile Money.
However, Ladha argues that the reliance on philanthropy has made African businesses vulnerable to shifting priorities. “A few years ago, everyone was focused on education and youth employment. Then it shifted to food security, then agritech, and now climate tech. We must stop building businesses that depend on the whims of philanthropies,” he said.
The withdrawal of Western funding presents both a challenge and an opportunity for Africa’s startup ecosystem. While it exposes vulnerabilities, it also pushes the continent’s entrepreneurs to explore more sustainable funding models that don’t hinge on external goodwill.
