A venture capital fund being established in Joensuu is attracting interest despite the current exceptional circumstances. Organisations whose operations emphasise a regional focus on regional development are enthusiastic about taking part, and assistance in bringing together the investors is being provided by international venture capital company Redstone.

The City of Joensuu will shortly be setting up its second venture capital fund. The approximately EUR 6 million North Karelian Growth Fund, just like the Startup Development Joensuu Fund established a few months ago, is intended to accelerate and internationalise business activities in the region.

The North Karelian Growth Fund will primarily be seeking institutional investors. With its planned launch date set for the autumn, the Fund has already attracted interest from several actors in the region.

– It is great that the organisations in this region have the courage to look to the future at such a time as this. The region has the resolve and readiness to start building for a new upswing once we get through this crisis. The swift actions of the City of Joensuu in launching the new fund have also been important, says Harri Palviainen, CEO of Business Joensuu.

Strong regional actors willing to invest

Organisations that have already shown an interest in investing in the North Karelia Growth Fund include LähiTapiola East, OP North Karelia and North Karelia Entrepreneurs.

– Supporting companies and the vitality and the well-being of our own region is at the core of our values. There is a lot of generational transition coming for this area, so new entrepreneurs and business activities are needed, says Juha Mäkinen, Managing Director of LähiTapiola East.

– By its very existence, the fund creates opportunities for development, and it may be decisive in bringing to the area companies that would otherwise have located themselves elsewhere. It also strengthens the cooperation needed to maintain entrepreneurship and innovation and overcome this current crisis, says Jaana Reimasto-Heiskanen, Managing Director of OP North Karelia.

– We need growth-oriented entrepreneurs that are ready to take risks and innovate. The new fund supports this goal, says Merja Blomberg, Managing Director of North Karelian Entrepreneurs.

The coronavirus crisis has impacted companies also in North Karelia, but there is hope for the future.

– The crisis has not brought a wave of job terminations; instead, companies have mostly laid off their personnel. The vibrant start-up business activities have continued even during the crisis. Companies are constantly receiving enquiries related to the fund that has already been established, and investment decisions are being made just as they were before, Palviainen reports.

The fund is also expected to bring from outside the region investors and companies looking to locate themselves in the area.

– Because of having its own university and a long history of industrial endeavours, North Karelia is particularly strong in sectors such as forestry and the bioeconomy, photonics and tourism. The fund’s activities will certainly draw interest also from outside the region from national and international industrial players that are focused on these sectors. In addition, the fund’s investments provide investors with natural opportunities for cooperation in subcontracting, joint product development and resale, explains Kaj Hagros, who leads the Nordic operations of Redstone Nordic, which is responsible for managing the fund.

In addition to its capital investment expertise, Redstone also contributes strongly to the development and further financing of the fund’s investments and brings with it an extensive contact network. The company operates in seven countries and is one of Germany’s largest technology sector venture capital investors.

The funds are also an interesting choice for venture capital investors during the crisis.

– Crises reshape value chains and operating models, and this has always resulted in the emergence of new winners at the global level, Hagros points out.

The objective is to use the North Karelian Growth Fund to provide funding to 30–50 companies. The intention is to focus the fund’s investment activities on young people seeking strong growth and internationalisation as well as start-up companies and seed stage companies that are linked to the North Karelian economy. The City of Joensuu and the Centre for Economic Development, Transport and the Environment are together investing around EUR 3.5 million in the EUR 6 million fund.

More information:

Janna Puumalainen, Development Director, City of Joensuu, tel. +358 50 511 5028

Harri Palviainen, Chief Executive Officer, Business Joensuu, tel. +358 50 096 7744

Kaj Hagros, Redstone Nordics Ltd, tel. +358 40 849 1749