Two island nations. Identical populations. Radically different venture outcomes.
Estonia and Mauritius each have approximately 1.3 million people. Yet Estonia has produced 10 unicorns valued at over $1 billion each, while Mauritius struggles to attract even $2 million in annual startup funding. What explains this 500x difference in venture capital success?
In advance of the upcoming Fund Manager Masterclass in Mauritius, we have analyzed both ecosystems through the lens of the VC Ecosystem Canvas, the answer lies not in any single factor, but in how eight critical components work together—or don’t. Here’s what the data reveals.
1. Talent, Culture & Dealflow: The Foundation
Estonia: A Self-Reinforcing Flywheel
Estonia has cracked the code on talent recycling. When Skype was acquired by eBay for $2.6 billion in 2005, it didn’t just create wealth—it created a generation of experienced entrepreneurs and angel investors. The “Skype Mafia” went on to found or fund companies like Wise, Bolt, and Pipedrive.
Today, Estonia’s tech workforce has grown nearly tenfold in the past decade. The country produces a steady stream of STEM graduates who view entrepreneurship as a viable career path. More importantly, 25% of Estonian startup founders are now foreign-born, attracted by the e-Residency program and Startup Visa—proving that talent acquisition transcends borders when the ecosystem is right.
The dealflow is robust: over 1,400 active startups generating hundreds of investment opportunities annually.
Mauritius: Potential Without Pipeline
Mauritius produces 1,200 STEM graduates annually and has an impressive 79% smartphone penetration rate. The infrastructure is there. But the entrepreneurial culture is still developing.
As one local founder told researchers: “It’s an unfortunate cycle because to expand outside the country, you need funding which is rare because investors think Mauritius is too small a market.”
The country currently has just over 100 tech startups—less than 10% of Estonia’s number. Without exits creating successful entrepreneur-investors, there’s no flywheel effect. The talent exists, but the culture of ambitious, globally-minded entrepreneurship is still nascent.
2. Early-Stage Financing: Angels Make or Break Ecosystems
Estonia: Active Angel Network
The Estonian Business Angels Network (EstBAN) has over 300 active members providing €20,000-€500,000 in seed funding. These angels don’t just write checks—they’re typically successful entrepreneurs themselves who provide mentorship, networks, and credibility.
The presence of experienced angels means Estonian startups can access pre-seed and seed capital relatively easily, allowing them to validate ideas before approaching institutional VCs.
Mauritius: The Missing Middle
Mauritius lacks a robust angel investor culture. The Mauritius Africa FinTech Hub provides some early-stage support, but the ecosystem doesn’t have the density of high-net-worth individuals with startup experience who can write €50,000-€200,000 checks.
This creates a critical gap: startups can’t get the initial capital needed to prove their concept and attract larger VC rounds. Without angels, the entire funnel breaks down.
3. Venture Capital & Growth Financing: Follow-On Matters
Estonia: €1 Billion Ready to Deploy
Estonian VC funds currently have approximately €1 billion in capital available for deployment. Major local players like Superangel, Tera Ventures, Change Ventures, and Karma Ventures are complemented by international giants like Sequoia, Accel, and Andreessen Horowitz.
Critically, Estonia attracts 8x more venture capital per capita than the EU average and leads globally with VC funding representing 1.17% of GDP—higher than Singapore, Israel, or the United States.
The ecosystem supports companies through multiple rounds: seed, Series A, Series B, and beyond. Bolt raised €628 million in 2022 alone. This depth of capital means Estonian startups don’t hit a funding cliff as they scale.
Mauritius: Gateway Capital, Not Growth Capital
Mauritius is projected to see $224.9 million in VC market volume for 2024, but here’s the catch: most funds domiciled in Mauritius invest elsewhere in Africa, not in Mauritian startups.
Launch Africa, the largest local VC with 146 investments, and Compass (owned by ENL Group) are the exceptions. But as one VC managing partner noted bluntly: “VC is a game of scale and for startups whose only focus is the Mauritius market, it’s going to be hard for a VC to write a cheque for a business whose market is only 1.7 million at best.”
The capital exists in Mauritius—it’s just flowing through the country, not into it.
4. Limited Partners: Who Funds the Funds?
Estonia: Government as Cornerstone LP
SmartCap, Estonia’s government-backed fund-of-funds, has been transformative. With approximately €176 million in net value, SmartCap invests in private VC funds that focus on Estonia, essentially providing cornerstone capital that de-risks funds for other LPs.
The government has also launched specialized funds: a €100 million Green Fund for cleantech and a €100 million Defence Fund for dual-use technologies, backed by EU NextGenerationEU funding.
This public-private model attracts institutional investors who might otherwise overlook such a small market.
Mauritius: Limited LP Base
Mauritius lacks a robust institutional LP base. Without a critical mass of pension funds, family offices, or corporate venture arms investing in local VC funds, fund managers struggle to raise capital at scale.
The government provides some support through schemes like the Mauritius Research and Innovation Council (offering $2.62 million in grants), but this is grants, not LP investment in funds. There’s no SmartCap equivalent creating a sustainable fund-of-funds ecosystem
5. Exits: Proof of Concept Matters
Estonia: Track Record of Wins
Estonia’s exit history is its secret weapon:
- Skype → eBay ($2.6B, 2005)
- Playtech → IPO (became unicorn 2012)
- Wise → London Stock Exchange IPO (2021, now valued at $11B)
- Bolt → Preparing for IPO (valued at €8.4B)
- Multiple acquisitions of mid-sized companies
These exits validate the ecosystem, return capital to investors (who reinvest), and create experienced entrepreneurs who mentor the next generation.
Notably, 2024 was challenging: Estonia saw an all-time low in new startup formation, partly because founders are waiting for better exit conditions. This highlights that even mature ecosystems need continuous exits to stay healthy.
Mauritius: Exit Desert
Mauritius has virtually no meaningful tech exits. Without success stories, there’s no proof of concept for investors, no capital returned to the ecosystem, and no experienced entrepreneurs to recycle back into the system.
This is perhaps the biggest structural problem: investors need to believe exits are possible before they’ll invest at scale.
6. Service Providers: The Connective Tissue
Estonia: 150+ Support Organizations
Estonia has built a comprehensive support infrastructure: 150+ organizations including tech incubators, accelerators, legal firms specializing in VC deals, accounting firms that understand startup economics, and PR agencies focused on tech companies.
Organizations like Startup Estonia act as ecosystem orchestrators, connecting founders with resources. The density means startups can find specialized help at every stage.
Mauritius: Building Infrastructure
Mauritius has initiatives like the Mauritius Africa FinTech Hub, theTurbine accelerator, and the Mauritius Emerging Technologies Council. But the ecosystem lacks depth.
The country has strong corporate service providers (CSPs) for fund domiciliation—Mauritius ranks first in Africa for fund domiciliation according to a 2024 MasterCard Foundation study—but these serve offshore clients, not local startups.
There’s a mismatch: world-class infrastructure for hosting African-focused funds, but insufficient startup-focused service providers.
7. Community & Education: Building the Pipeline
Estonia: Entrepreneurship as National Identity
Estonia has embedded entrepreneurship into its education system and national culture. Universities offer specialized programs in entrepreneurship. The e-Residency program has attracted 100,000+ digital entrepreneurs, creating a global community connected to Estonia.
The startup community is tight-knit—with only 1.3 million people, everyone knows everyone. This density creates serendipitous connections and knowledge sharing. Community events, from the Estonian Startup Ecosystem Annual Fireside Chat to countless meetups, keep the ecosystem connected.
Mauritius: Emerging Community
Mauritius has launched initiatives like VIT Mauritius offering AI and machine learning degrees (55% of students from other African countries), and various fintech training programs.
The Digital Mauritius 2030 Strategic Plan commits to certifying 10,000 AI professionals by 2030, with $50 million invested in STEM education.
But community density is still developing. With only 100+ tech startups versus Estonia’s 1,400, there aren’t enough peers for the network effects that create spontaneous collaboration and knowledge transfer.
8. Government: Policy Creates Possibilities
Estonia: Digital Government as Competitive Advantage
Estonia’s government doesn’t just support startups—it operates like a startup itself. 99% of government services are online. You can start a company in 15 minutes. Tax filing takes minutes. E-signatures are legally binding and universal.
The government offers:
- E-Residency (allowing anyone globally to access Estonian business infrastructure)
- Startup Visa (attracting foreign founders)
- Tax incentives (reinvested corporate profits are untaxed)
- Direct support through Startup Estonia and SmartCap
This isn’t about grants—it’s about removing friction and creating the world’s most efficient business environment.
Mauritius: Policies in Progress
Mauritius has made significant strides:
- 8-year tax exemptions for innovation-driven startups (since 2017)
- 5-year tax holiday for e-commerce and P2P lending
- Regulatory Sandbox Licence for fintech/blockchain testing
- National SME Incubator Scheme
- Innovator Occupation Permit
- Premium Visa for digital nomads
These are excellent policies. But implementation and ecosystem integration are still maturing. Mauritius is building the infrastructure Estonia built over 20 years—the question is whether it can accelerate the learning curve.
The Missing Link: Networks & Relationships
The VC Ecosystem Canvas shows all eight components connected by “Relationships, Networks & Connective Tissue.” This is where Estonia truly excels and Mauritius likely struggles.
Estonia’s ecosystem is densely interconnected. The Skype Mafia invested in Wise and Bolt founders. Successful entrepreneurs become angels and VCs. Founders who exit become mentors. Government officials have startup experience. Service providers are former operators.
Mauritius is building components in parallel, but they’re not yet tightly integrated. The financial services sector operates separately from the tech startup scene. International funds domiciled in Mauritius don’t invest locally. Government initiatives don’t always connect to on-the-ground founder needs.
Recommendations for Mauritius: Building on Strengths
Mauritius has unique advantages Estonia lacks: strategic location as Africa’s gateway, strong financial services infrastructure, political stability, and preferential access to Indian and African markets. Here’s how to leverage them:
1. Embrace the Africa Gateway Strategy
Stop competing with Estonia on their terms. Mauritius will never be “Africa’s Estonia”—but it can be “Africa’s Connector.”
Action: Incentivize all Mauritius-domiciled VC funds to invest at least 20% in Mauritian startups or African startups headquartered in Mauritius. This would be along the same lines we now see in places like Saudi and Ireland. Create tax incentives for this. Set up LP structures to back a wide number of funds, but having those funds allocated to local, regional startups.
2. Create a Government-Backed Angel Co-Investment Fund
The missing angel layer is killing the ecosystem at the source.
Action: Establish a $20 million government fund that co-invests 50/50 with private angels on tickets of $25,000-$200,000. This de-risks angel investment while building the angel community. Model it on Estonia’s SmartCap but focused on seed stage.
3. Launch “Mauritius Labs” – A Pan-African GP Accelerator
Build on your geographic advantage.
Action: Create a government-supported GP accelerator that brings 100 African Emerging Fund Mangers per year to Mauritius for 3-month programs. Provide work permits, working capital, warehousing, office space, and connections to Mauritius-domiciled LPs. GPs must maintain legal entities in Mauritius for 2 years. This creates dealflow, attracts talent, and positions Mauritius as Africa’s GP/LP hub. (pssss, don’t think this is possible, just look to Luxembourg’s ICFA. Don’t yet know what a GP accelerator is? Just look at some of our work here.)
4. Mandate Ecosystem Participation for Fund Licensing
Use regulatory network to build connective tissue.
Action: Motivate all funds seeking Mauritius domiciliation to: (a) host quarterly office hours for local startups, (b) participate in local pitch events, (c) provide annual scholarships to Mauritian students. Turn the offshore financial sector into an engaged ecosystem participant.
5. Create “Exit Readiness” Infrastructure
Build confidence in exit possibilities.
Action: Establish partnerships with London Stock Exchange, NYSE, and major African exchanges for streamlined IPO processes for Mauritius-domiciled companies. Create a secondary market for startup shares to provide liquidity before full exits. Model this on Estonia’s cooperation with LSE that enabled Wise’s successful IPO.
6. Activate the Indian Ocean Diaspora
Estonia leveraged its global diaspora through e-Residency. Mauritius can do the same.
Action: Create an “Indian Ocean Innovation Network” connecting Mauritian diaspora in banking, tech, and business globally. Offer investment matching, board positions, and advisory roles. Many successful Mauritians abroad would invest in their home ecosystem if given structured opportunities.
7. Integrate Education with Ecosystem
VIT Mauritius is a start, but it needs tighter industry integration.
Action: Require all tech companies receiving government incentives to provide internships or mentorship. Create entrepreneurship tracks in all universities with real startup projects funded by the government. Make “one year working in a startup” a graduation requirement for business/CS students.
8. Focus Ruthlessly on Fintech & AI for Africa
Don’t try to compete in every sector—dominate two.
Action: Declare Mauritius “Africa’s Fintech & AI Capital.” Concentrate all resources (grants, accelerators, tax incentives, regulatory sandboxes) on these two verticals. Build critical mass through specialization before expanding. Estonia’s early focus on fintech (Wise, Bolt payments) created momentum that expanded to other sectors.
The Bottom Line
Estonia took 20 years to build its ecosystem, starting with Skype in 2003. Mauritius is essentially in year 5-7 of serious ecosystem building. The gap is real, but not insurmountable.
The key insight: Estonia didn’t succeed because of its size—it succeeded despite it. The same can be true for Mauritius, but only if it:
- Stops thinking domestically (force global mindset from day one)
- Leverages existing strengths (financial services, geographic position)
- Creates tight integration between all ecosystem components
- Focuses ruthlessly on 2-3 sectors rather than trying to do everything
- Builds for exits from the beginning
- Start with building the world’s leading GP accelerator – in Mauritius
The infrastructure is coming together. The government is supportive. The talent exists. What’s needed now is intentional ecosystem architecture—connecting the pieces, creating the flywheel, and proving that exits are possible.
Estonia has shown what’s possible with 1.3 million people. Mauritius has the same population, better weather, and a gateway to a continent of 1.3 billion people.
The question isn’t whether Mauritius can build a thriving VC ecosystem. The question is: how quickly can it learn from those who’ve already done it?
What do you think? Are there other lessons from successful small-nation ecosystems that Mauritius should consider? Share your thoughts in the comments.
#VentureCapital #Startups #Mauritius #Estonia #AfricaTech #Ecosystem #Innovation