Let’s cut through the noise.
There’s a troubling pattern unfolding in African tech, one where startups raise funding, boast about scale, then spiral into scandal not long after. The latest high-profile collapse? 54 Collective, formerly known as Founders Factory Africa. A venture studio that once backed 70+ startups and created 17,000+ jobs, now shut down over a $689,000 rebrand that their biggest funder, Mastercard Foundation, says was never approved. That misstep was the tipping point in a saga involving unapproved pivoting, audit red flags, and questionable transfers of millions.
But this isn’t just their story. It’s about a deeper rot in the system.
It’s a systemic warning for every African founder, every investor, and every ecosystem worker trying to build with integrity.
The truth is, however, that this continued shady behaviour by a few is damaging the credibility of the entire African startup ecosystem.
From Hope to Headlines for the Wrong Reasons
Startups across the continent face brutal challenges, limited infrastructure, weak capital markets, low purchasing power, and an investor community that’s already sceptical of the continent. So when African startups do get a shot, when an institution takes a bet on them, it’s not just money on the line. It’s trust. It’s a reputation. It’s the fragile, hard-earned belief that this ecosystem is worth investing in.
So when a founder decides to secretly pivot from a nonprofit to a for-profit venture, reroute millions into a new shell company, or use donor grants for a flashy new identity, the cost isn’t just internal. The damage ripples.
One Startup’s Misstep, A Continent’s Setback
Let’s be real: Africa is already underfunded. In 2024, VC funding into the continent dropped by 7%. Compare that to Latin America or Southeast Asia, where funding is rebounding. African founders, especially those outside the usual hotspots like Lagos, Nairobi, and Cape Town, are hustling to secure even $20,000 in pre-seed. Many can’t.
Now imagine being a founder in Asaba or Aba or Gombe, trying to convince a foreign VC to back your vision. And the last thing that VC read? That an African venture studio allegedly misused grant money and ghosted its own governance board. You’re starting the pitch from minus 10.
This is not just about mismanagement. It’s about betrayal. Of trust. Of mission. Of everyone building honestly.
What the Data Shows About the Funding Crunch
In 2024, African tech raised just US$2.2 billion, down 25 % from 2023’s $2.9 billion, and nearly 53% less than in 2022’s $4.6 billion peak. Only 188 startups raised at least $1M in 2024, down from 209 in 2023 and far below 353 in 2022.
The Big Four markets–Kenya, Nigeria, Egypt, and South Africa, still dominate, accounting for 84% of total capital, but the ecosystem remains fragile.
- Partech/AVCA data: 2024 saw a 28% drop in deal value and 22% fewer deals compared to previous cycles.
- West Africa raised $587M (27% of total), a 3% drop year-over-year, while East Africa declined 18%. Nigeria led with $410M.
- Debt-financing growth slowed, and debt made up about 31% of total funding vs. 35% in 2023. africaglobalfunds.com
Yes, fintech megadeals like Moniepoint’s $110M and Moove’s $110M helped stabilize totals. But overall, deal velocity and volume dropped sharply.
For founders in emerging hubs, like Aba, Uyo, Asaba, this matters. When flagship entities misuse funds or disappear overnight, trust erodes, and a broader stigmatization sets in.
The Power Play Nobody Talks About
There’s an uncomfortable subtext here: power.
In many African startup circles, especially those backed by international donors, there’s often a silent war between control and collaboration. Founders want autonomy. Funders want accountability. But instead of having grown-up conversations, some founders opt for stealth, pivots without notice, parallel companies without disclosure, strategy changes without consent.
Some founders mistakenly treat philanthropic funding as venture capital, pivoting mid-stream to monetize or restructure without dialogue. That’s not innovation; it’s betrayal. It’s a power play disguised as pivot.
When you raise as a non-profit, then spin off into a for-profit entity behind your investor’s back, you’re not being creative, you’re ignoring systems meant to preserve integrity.
That’s not bold leadership. That’s recklessness. It’s treacherous. And it’s short-sighted.
You can’t accept funding from institutions built on compliance, transparency, and structure, then try to “move fast and break things” without consequences. This isn’t Silicon Valley. The rules here are different. And the stakes are higher.
What We Must Demand Going Forward
African tech needs to grow up. Fast.
We need better governance, not just in startups but also in investor-founder relationships. We need honest conversations around what funding really means: it’s not free cash, it’s a covenant. We need boards that work, grant agreements that are respected, and investors that stay engaged beyond the first press release.
But most importantly, we need founders who understand this truth:
Your startup is not just about you. It’s about all of us.
Your failure is not private. Your success is not solitary. Every win or scandal reflects on the whole continent. That’s the burden and beauty of building in Africa.
To the Ambitious Builders in the Shadows
This is a message to the real founders. The ones bootstrapping in Uyo. The ones in Port Harcourt pitching daily. The ones in Asaba, Owerri, Aba momentarily ignored by the big tech media but showing up anyway.
Everyone must do their part to build an ecosystem not stained by scandal. We can access honest funding and partners who care. But to earn that, we, as a collective, must demand integrity from our peers and heroes alike.
Our message must be clear, Shady behavior is not innovation. It is a sabotage of the ecosystem.
We must build different. We must build right. Or not at all.
Read Also: When-the-money-talks-what-the-fall-of-54-collective-teaches-african-startups-about-investor-funding
