The objective of reaching a capital of EUR 6 million of the venture capital fund North Karelia Growth Fund, which invests in young companies in North Karelia, was met in November. The purpose of the fund is to revitalise and strengthen the business life and entrepreneurship of the North Karelia region and to provide an opportunity to invest in the region.
The capital of the North Karelia Growth Fund of EUR 6 million consists of EUR 2.5 million of private investors and a total investment of EUR 3.5 million of the City of Joensuu, which has ELY support of EUR 2.5 million. There are 20 private investors around the region, coming from Joensuu and Lieksa, Kitee, Liperi, Outokumpu, Kontiolahti and Nurmes. Investors include North Karelia Cooperative Society PKO, LähiTapiola Itä, Osuuspankki North Karelia, Outokummun metalli, Broman Companies Oy, Master Yhtiöt and Aqwas Oy of Laakkonen family.
Concrete support to boost international growth
The fund is managed by the International venture capital company Redstone, which will launch its operational activities in early 2021. Redstone has strong expertise in developing growth companies, which means that investment targets receive not only financial but also concrete support for business growth. The company operates in seven countries. It is one of Germany’s largest venture capital investors in the technology sector, so international contact networks are also in their own category.
– It’s great to be involved in supporting North Karelian growth companies! The region has a long tradition in fields such as industry, forest industry, bioeconomy and photonics. We are looking for companies aiming for international, scalable growth in particular, says Kaj Hagros, who leads the Nordic operations of Redstone.
The regional fund creates new opportunities for cooperation, product development, sales and internationalisation. The operating principle of Redstone is to be a so-called co-entrepreneur, who works together with investment targets to achieve common goals. Redstone is one of the investors in North Karelia Growth Fund.
– We also work together with various actors in the region, such as Business Joensuu, Spark Joensuu and the university, continues Redstone’s partner Oskari Lehtonen, who, in addition to his strong experience from investor and growth companies, has also been a founder of growth companies and has concretely lived the challenges and opportunities of growth.
The region works together for a common goal
North Karelia strongly believes in regional business growth and progress. During the coronavirus year, support from within the region for entrepreneurship and business was considered increasingly important. The region’s own equity fund also attracts national attention, and hence investments and new companies in North Karelia can also come from outside the region.
In the past, regional investment opportunities have been limited. Now, the fund’s objectives were met quickly and interest in possible subsequent investment rounds has already arisen. Due to the corona crisis, the capital collection that was suspended in the spring was restarted in August, after which investors were rapidly involved and the capital was collected in three months. The investment targets are also being developed by Business Joensuu, which implements the project, through its services and networks.
– Discussions with investors have been conducted in a very positive spirit. It has been great to see how genuinely the region wants to support the growth of young companies. People believe in startups and internationalisation. Naturally, investors also have returns expectations from the fund. The fund cooperates across municipal boundaries. The fund launched at the initiative of the central City of Joensuu makes use of the entire region. Business activities and growth are in the forefront regardless of the municipality, says Harri Palviainen, Managing Director of Business Joensuu.
The aim of North Karelia Growth Fund is to fund 15-25 companies in the North Karelia region, support start-up and growth companies and stimulate entrepreneurship in the region. In particular, funding is targeted at strong growth companies that plan internationalisation as well as companies starting their operation in Joensuu and elsewhere in North Karelia.
The previously launched StartUp Kehitys Joensuu Fund, managed by the Business Joensuu subsidiary, collected EUR 2.5 million of capital and has already made four investments. Two regional funds have more than 30 private investors and a total capital of EUR 8.5 million, which is a unique achievement for a regional fund on the Finnish scale. Joensuu and North Karelia also hope that young companies from outside the region come to operate and grow in the active region and to discuss possible funding from our private equity funds.
Harri Palviainen, Chief Executive Officer, Business Joensuu Oy, tel. +358 500 96 7744
Kaj Hagros, Redstone Nordics Ltd, tel. +358 40 849 1749