How a $10.8M Fund is Betting on Finland's DeepTech Future

Jan de Vries · 2026-08-31

Here's something interesting for anyone watching the European startup scene. German VC firm Redstone just announced a new fund, and it's got a pretty specific focus. They're launching the North Karelia Growth Fund II, clocking in at about $10.8 million. The initial investment tickets? They'll range from roughly $108,000 to $324,000. It's a follow-up to their first North Karelia fund, which they started back in 2020. So they're clearly seeing something worth doubling down on. ### Who's Backing This Move? It's not just Redstone's own money on the line. They've pulled together a notable group of local backers. The list includes the City of Joensuu, the Broman Group, and the University of Eastern Finland. You've also got financial and cooperative institutions like LähiTapiola Itä, the North Karelia Cooperative Society (PKO), OP North Karelia, and Laakkonen Kapital putting skin in the game. That kind of local buy-in tells you this is about more than just returns; it's about regional development. Kaj Hagros, the Managing Partner at Redstone Nordics Oy, put it simply. "Five years of working alongside exceptional founders in North Karelia has shown us the depth of expertise in the region," he said. "The ecosystem has matured significantly... This potential, combined with our focus on returns, is exactly why we are now launching a second fund." ### A Wave of European Tech Investment Now, this fund isn't happening in a vacuum. It's part of a much bigger trend. Across Europe, there's been a surge of specialist venture funds targeting the same high-stakes tech areas. We're talking about a reported $2.7 billion in fund announcements just for 2026, all focused on DefenceTech, dual-use tech, DeepTech, and the energy transition. To give you a sense of scale, some of the bigger players include: - The $540 million E2D and DTCP Project Liberty defence funds - Lakestar's $283 million Resilience I vehicle - Kembara's $810 million first close for its DeepTech growth fund Up in Northern Europe, Copenhagen's The Footprint Firm closed an $82 million fund for climate and DeepTech, while Climentum Capital hit a $65 million first close for its second climate HardTech fund. So Redstone's new fund is playing in a crowded, but booming, field. ### What Makes This Fund Different? So where does the North Karelia Growth Fund II fit in? Against those giant pan-European funds, this one takes a different approach. It's hyper-local and focused on the earliest stages. The strategy combines those $100k–$300k initial checks with a mandate that zeroes in on three key areas: - Semiconductors and photonics - Defence and dual-use technologies - Solutions for the energy transition Jere Penttilä, the Mayor of Joensuu, welcomed the move. "It is great to see experienced fund managers such as Redstone continuing to invest in our region," he noted. "This kind of long-term commitment strengthens the conditions for growth and new jobs across North Karelia." ### A Track Record of Early Belief Redstone itself was founded in 2014 and is based in Berlin. They now manage 15 funds with approximately $702 million in assets. Their first North Karelia fund invested in 17 early-stage companies. One of their success stories is Kelluu, a Joensuu-based airship company. Redstone was one of Kelluu's first institutional backers when they were just proving their concept. Fast forward to this year, and Kelluu raised $16.2 million in a round led by the NATO Innovation Fund. Janne Hietala, Kelluu's CEO, credits that early, local support. "The fund invested in our company at an early stage, when we were still proving our concept on the edge of Europe," Hietala said. "Having an experienced, locally present investor on board from our first funding round helped us build the growth trajectory that brought us to where we are today." ### Looking Ahead: The Next Five Years So what's the plan? Over the next five years, this new fund aims to invest in about 15 to 20 early-stage companies. The key condition is that these companies must be based in North Karelia or be building a significant presence there. It's a deliberate strategy to funnel capital and expertise into a specific region. The fund will be led by portfolio managers Kaj Hagros and Mikael Myllymäki. Harri Broman, Chair of the Board at Broman Group Oy, summed up the local sentiment. "North Karelia needs new companies and entrepreneurs who are willing to work hard – they are the foundation of our region's vitality," he stated. "It is good to see capital and expertise being directed here, where the work is being done." In a landscape of massive funds, this is a reminder that concentrated, local bets on foundational technologies can be just as powerful. It's not just about the money; it's about building an ecosystem from the ground up.