The newly-rebranded Africa-focused venture capital firm, 54 Collective, plans to shake-up start-up investments on the continent by abandoning the Silicon Valley-style plug-and-play model.

54 Collective CEO Bongani Sithole believes the global venture capital (VC) investment model is unsuited to the African start-up scene due to its unique setting, which requires founders to be provided with comprehensive support that goes beyond funds.

In an interview with ITWeb Africa, Sithole stated that 54 Collective, formerly Founders Factory Africa, has wired its 70-strong workforce over the last five years to rethink “investing in our own people”.

Sithole describes Africa as a potential investment hotspot, but his company recognises the region does not require a one-size-fits-all approach.

In the interview, the 54 Collective head told ITWeb Africa what motivated his company to rebrand, and the challenges and opportunities the VC sees on the continent, as it embarks on its ambitious journey to support entrepreneurs in Africa’s 54 countries.

“One thing that we have been clear about is that the plug-and-play model doesn’t work in Africa. West Africa is different from South Africa, East Africa to North Africa. In this regard, what we have done is to have a model that speaks to and supports local entrepreneurs,” says Sithole.

“We are aware the different regions [on the continent] face different problems. In many cases, it’s regulation, infrastructure, access to capital, financial inclusion, as well as politics. All these things are at macro levels that create headwinds for entrepreneurs. The way we are navigating these things is that we have built a team of partners, including our teams that work with entrepreneurs to overcome these barriers they face every day.”

Sithole explains: “As 54 Collective, our key message is how do we redefine investing in our own people, in the start-ups and innovations that we see on the continent, and how do we help entrepreneurs to build without barriers.

“So, the opportunity we see is how we enable African entrepreneurs to look at challenges surrounding them as opportunities. Instead of complaining about challenges, we want to help them look at these as opportunities as a way of building the continent.”

According to Sithole, 54 Collective’s business model is developing to better assist disruptive technology initiatives across the continent.

Explaining the name change, Sithole says: “We were limited in sectors − which were agritech, fintech and health − and we have learned a lot in the last four to five years. We wanted to evolve, hence the change in name based on the learnings.

“54 is a reflection of our ambition, being a Pan-African company and also a reflection of supporting 54 states on the continent.

“Whereas three years ago we were operating in three markets, today we are truly a Pan-African company.”

Turning to the criteria used to fund entrepreneurs, Sithole says 54 Collective backs technology-led opportunities and also supports ideas to pre-Series A stage.

54 Collective provides support in the form of catalytic financing and value-added services through its Venture Success Platform, which is comprised of a team of seasoned venture specialists who give personalised assistance.

This includes product, growth, commercial partnerships, business strategy, personnel, technology and data to establish scalable companies.

The team also guarantees that founders have access to the appropriate funds by preparing them for investor readiness, investor access, fundraising strategies, debt unlocking and impact capital, according to the company.

54 Collective says its strategy is to provide equity and non-dilutive finance up to $500 000, allowing founders to expand their businesses across the continent.

To break down access barriers, female founders will receive an additional $150 000 of non-dilutive financing compared to their male counterparts, according to Sithole.