South African Venture Firm 54 Collective Faces Liquidation in Mastercard Foundation Scandal
A South African High Court has ordered the provisional liquidation of venture firm 54 Collective, previously known as Africa Founders Ventures (AFV), amid serious allegations of financial mismanagement. The legal action stems from a dispute with the Mastercard Foundation over a substantial $106.5 million grant. The foundation has accused 54 Collective of misusing over $42 million of the funds disbursed between 2023 and 2024. In response to the allegations, the court has frozen more than a dozen of the firm’s bank accounts and appointed an independent liquidator to oversee the process.
Unraveling the Allegations
The case against 54 Collective is built on significant findings from a forensic audit conducted by Deloitte, which was prompted by the Mastercard Foundation’s legal action. A major point of contention is the firm’s rebranding from Africa Founders Ventures to 54 Collective in August 2024. The foundation claims this name change was not only unauthorized but also incurred costs of nearly $690,000. Furthermore, the audit uncovered a questionable transfer of $4.59 million to Founders Factory Africa (FFA). This transaction raised alarms as FFA is a for-profit company reportedly managed by the same individuals leading 54 Collective, suggesting a potential conflict of interest and misuse of grant funds.
The provisional liquidation of 54 Collective marks a critical juncture for the African venture capital landscape, highlighting the immense scrutiny that accompanies large-scale philanthropic funding. The court’s intervention and the ongoing investigation underscore the importance of robust governance, transparency, and accountability for organizations managing development funds. As the liquidation process unfolds, the outcome will likely have significant implications for how foundations and venture firms collaborate to support the continent’s growing tech ecosystem, reinforcing the need for stringent oversight to prevent financial misconduct.
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