Investments in African startups show growing interest, potential within region, says Sithole

Bongani Sithole is the Chief Executive Officer, 54 Collective, formerly Founders Factory Africa, a venture capitalist firm. Sithole is a tech-entrepreneur, who over the last 18 years has built three technology businesses from the ground up. Before joining Founders Factory Africa, Sithole’s last company, Black Beard, built tech businesses on behalf of corporates. He is a strategic thinker, bridging the gap between business needs and technology, and is passionate about helping brands grow their competitive advantage in the market. As CEO, Bongani leads the early-stage investor as it seeks to invest in, collaborate, and support founders to go beyond borders and make a discernible impact through commercially orientated innovations that can sustainably improve the lives of the continent’s people. He spoke with ADEYEMI ADEPETUN.

Can you take us through the operations of 54 Collective?
Founders Factory Africa has changed its name to 54 Collective. This name change and rebrand signifies the company’s evolution from a corporate-backed model to becoming a Venture Capital firm that consists of a fund offering catalytic capital and a Venture Success Platform providing value-add services to entrepreneurs. The value-add support is offered through a team of venture specialists and ex-founders who walk side by side with founders to provide them content, tools, and connections to corporate partners, investors, and talent.

54 Collective, formerly Founders Factory Africa serves entrepreneurs across the entire African continent, reflecting our commitment to all 54 African countries. We have one of the largest venture capital teams on the continent, with over 70 staff members with physical offices in Kenya, South Africa, Nigeria, and the UK, with plans to expand into North Africa later this year. Our strategic locations allow us to leverage deep regional expertise and networks.

This regional presence has resulted in an impressive portfolio of over 70 ventures across 11 countries. We are uniquely positioned to support African entrepreneurs in navigating local markets and overcoming regional challenges by having such a robust and geographically diverse team.

54 Collective is part of UTOPIA platform, a collection of funds across high-growth emerging and frontier markets, run by the experienced entrepreneurs; Alina Truhina, Bongani Sithole, and Roo Rogers. UTOPIA designs investment vehicles tailored to the needs of entrepreneurs and the regional markets. The platform provides access to talent, investment networks, data, and IP, currently including 54 Collective in Africa and The Radical Fund in Southeast Asia, with more funds and regions launching in the near future.

What are your footprints in this region, precisely Nigeria?
54 Collective has a strong presence in Nigeria, supporting numerous ventures and fostering entrepreneurship in the region. Our Venture Success Platform which consists of a team of venture specialists, actively engages with Nigerian startups, providing them with the necessary tools, resources, and funding to scale their businesses. We have worked with a large number of Nigerian startups since 2018, which make up a significant proportion of our portfolio, and provide side-by-side support so they may achieve significant growth. For instance, Renda, ​​a logistics company co-founded by Ope Onaboye, CEO and Bimbo Onaboye, Head of Product, scaled their business by 10x within 12 months of our support, including rolling out a robust technology solution and building a solid leadership team.

We also leverage our extensive network of corporate partners, investors, and talent to open doors to new opportunities and markets for Nigerian founders. This includes helping startups like VitruvianMD obtain pilots in new markets, expanding their footprint across Africa.

Lastly, Nigerian startups actively participate in our pathways, such as Gen F, where they receive validation budgets and value-add support to turn their ideas into venture-backable businesses. My CoverAi, another Nigerian startup, received significant support from us, refining their approach to customer acquisition and exploring new market segments.

Checks showed that 54 Collective plans to invest in over 100 startups in the next five years. How do you intend to achieve this feat?
To achieve our goal of investing in 105 startups over the next five years, we will leverage our extensive pan-African network and local expertise to identify and support high-potential ventures. Our strategy involves providing up to $500,000 in combined equity and non-dilutive capital, with special provisions for female founders to drive inclusivity and reach our target of 50 per cent female participation in entrepreneurship. We will also utilise our Venture Success Platform to offer tailored support in product growth, technology, and strategic partnerships. Furthermore, our connection to Utopia will enable us to design investment vehicles tailored to the needs of entrepreneurs and the regional markets while providing access to talent, investment networks, data and IP. This will enhance our capabilities by providing access to a broader network of resources and investment opportunities. This comprehensive strategy is designed to effectively scale our investments and drive the success of a diverse range of startups across the continent.

Which particular segment are you targeting and how is the funding going to come?
54 Collective, formerly Founders Factory Africa, is sector-agnostic in its investment approach, meaning we support ventures across various sectors rather than focusing on specific industries. Our funding comes from a diverse pool of investors, including Family Offices, Foundations, and other institutional investors. This diverse approach allows us to secure the necessary capital to invest in a wide range of startups across different sectors.

The investments 54 Collective is targeting, will it be by debt or equity?
54 Collective, formerly Founders Factory Africa, offers both debt and equity investments. We provide catalytic capital of up to $250,000 in equity and up to $150,000 in low-interest loans alongside equity funding. Also, women founders receive up to an extra $150,000 loan at a lower interest rate. This hybrid approach ensures that founders have the flexibility and financial resources they need to build and scale their ventures effectively.

What is your idea of startup to scale up?
Our idea of startup to scale-up involves providing comprehensive support to early-stage ventures to help them grow into successful, scalable businesses. This process starts with validating and refining the business concept, securing the necessary funding, and building a strong foundation in terms of product-market fit, business strategy, technology, and team. Our Venture Success Platform plays a crucial role in this journey by offering tailored support, mentorship, and access to networks that open doors to new opportunities and markets. By ensuring that startups have the right support at every stage, we help them scale quickly and sustainably.

There is also an ambition to increase female participation in entrepreneurship to 50%. How do you intend to achieve this?
To achieve our goal of increasing female participation in entrepreneurship to 50 per cent, we have implemented several strategies. Our fund offers additional financial incentives to women founders, including an extra $150,000 loan at a lower interest rate. We actively seek out and support women-led ventures through our Venture Success Platform and the Entrepreneur Academy by 54 Collective. By providing tailored support, mentorship, and access to networks, we empower women entrepreneurs to build and scale their businesses. Also, our initiatives like Gen F have seen 65% of women co-founders, showcasing our commitment to fostering female entrepreneurship.

How true is it that venture capitalists are shrinking, especially in this region?
While there may be fluctuations in the venture capital landscape, 54 Collective’s experience reflects a different narrative. Since our inception, 54 Collective, formerly Founders Factory Africa has expanded significantly and continues to grow. We have one of the largest venture capital teams on the continent, with over 70 staff members across Kenya, South Africa, Nigeria, and the UK, and we are opening an office in North Africa later this year. Our expansion into new markets and the creation of our Venture Success Platform underscore our commitment to supporting and scaling ventures across Africa.

Moreover, the substantial investment and support we provide to our portfolio ventures, alongside our goal to invest in over 100 startups in the next five years, demonstrates a robust and active approach to venture capital. This growth and ambition suggest a dynamic and expanding venture capital ecosystem, contrary to the notion of a shrinking market.

African Startups raised about $1b in funding in the last seven months. Can we say there are prospects in Africa’s Startup ecosystem?
The recent funding of about $1 billion raised by African startups indicates significant prospects in the continent’s startup ecosystem. This level of investment highlights the growing interest and potential within the region. At 54 Collective, formerly Founders Factory Africa, we are optimistic about the opportunities and continue to support startups to drive further growth. We also look forward to working with our partners at UTOPIA to design investment vehicles tailored to the needs of entrepreneurs across Africa and identify further opportunities to broaden investment networks, talent opportunities and share relevant IP to further support Africa’s founders.

Where do you see 54 Collective in another three years?
In the next three years, 54 Collective, formerly Founders Factory Africa envisions continuing its work as a leading venture capital firm on the African continent, continuing to redefine investment practices and drive substantial impact across key sectors. Here’s what we anticipate: we will continue to evolve our Venture Success Platform, expanding the range and depth of value-add support we offer to founders. This includes more tailored assistance in product development, fundraising, and market expansion, supported by our growing network of venture specialists and partners.

We are committed to achieving a 50% representation of female founders in our portfolio by 2025. To support this, we will enhance our catalytic capital offerings and support mechanisms specifically designed to break down barriers for women entrepreneurs.

Our regional presence will expand, with plans to increase our footprint in North Africa and further strengthen our operations in key markets across the continent. This expansion will enable us to better support startups and facilitate cross-border growth.

We will continue to embed impact in everything we do, focusing on areas such as financial inclusion, healthcare access, and climate resilience. Our investments will drive both commercial success and meaningful social impact, aligning with our mission to support scalable solutions that transform industries and improve lives.

54 Collective is poised to lead the venture capital space in Africa by combining innovative investment strategies with deep local expertise, and a commitment to impactful, inclusive growth.