Redstone Raises €10M North Karelia Fund II for Finnish Deep Tech

TL;DR

Berlin-based venture firm Redstone has unveiled a €10 million second fund for North Karelia, a rural region in eastern Finland, targeting 15 to 20 early-stage companies in semiconductors and photonics, defence and dual-use technology, and energy transition. The vehicle is backed by a mix of local government, university, insurance and pension capital rather than a typical LP roster of institutional funds-of-funds, and it follows a first North Karelia fund from 2020 that made 17 investments and produced an early proof point in Joensuu-based airship company Kelluu. It matters less for its size, which is modest even by micro-fund standards, than for what it signals: a specialized, place-based VC model that pairs a pan-European platform's underwriting discipline with hyper-local capital and deal flow in a region most global investors have never heard of.

Key Takeaways

This is a regional economic-development fund wearing venture capital's clothes, and that's the interesting part. The LP base, the City of Joensuu, the University of Eastern Finland, a regional cooperative society, a Nordic insurer's local arm, and a regional bank subsidiary, looks nothing like a typical seed fund's cap table. It's closer to how Nordic and German public-private innovation capital has worked for decades, now wrapped in a fund structure with a professional GP layer on top.

Redstone is running a multi-vehicle, multi-geography platform rather than a single fund. With roughly €650 million in AUM spread across 15 funds, including a separate €25 million Baltic-focused ocean tech vehicle under the same Nordics umbrella, Redstone looks less like a traditional single-strategy VC and more like a fund administration and origination platform that stands up narrowly scoped vehicles wherever it finds a defensible regional or thematic edge.

The thesis mix is a bet on deep tech's re-industrialization moment reaching the periphery. Semiconductors and photonics, defence and dual-use tech, and energy transition are all sectors currently commanding premium valuations in Western Europe's major hubs. Locating a dedicated vehicle for that thesis in a region of roughly 160,000 people is a wager that hard-tech talent and manufacturing know-how in secondary geographies is underpriced relative to Helsinki, Munich or Paris.

Check sizes signal a genuinely pre-seed and seed posture, not growth dressed up as early stage. At €100,000 to €300,000 per initial check against a €10 million fund, Redstone Nordics is underwriting to real seed-stage risk and needs meaningful follow-on capital, likely syndicated with larger European deep tech funds, for its winners to scale past Series A.

Fund Overview

Fund Name: North Karelia Growth Fund II
Fund Size: €10 million
Stage: Pre-seed and seed
Check Size: €100,000–€300,000 initial investment
Geography: North Karelia region, eastern Finland (Joensuu area)
Focus: Semiconductors and photonics, defence and dual-use technology, energy transition
Key LPs: City of Joensuu, Broman Group, University of Eastern Finland, LähiTapiola Itä, North Karelia Cooperative Society, OP North Karelia, Laakkonen Kapital

Why This Fund Matters

Regional, publicly-anchored venture vehicles are not a new idea in the Nordics, but most of them stay small, generalist and quietly underperforming. What makes North Karelia Growth Fund II worth a closer look is the specificity of its thesis. Semiconductors and photonics, defence-adjacent hard tech, and energy transition are precisely the categories that have pulled disproportionate capital and policy attention across Europe over the past two years, as the continent tries to rebuild sovereign capability in areas it let atrophy during the offshoring era. Anchoring a dedicated vehicle for that thesis in North Karelia, rather than Helsinki or Espoo, is a bet that the underlying research and manufacturing base, tied to the University of Eastern Finland and the region's materials science and forestry-adjacent industrial heritage, has more unclaimed upside than the capital currently flowing into it.

The fund's existence is also a data point on how European regional development money is being redeployed. Instead of grants or direct subsidies, the City of Joensuu and North Karelia Cooperative Society are routing capital through a professionally managed fund structure alongside a regional insurer and bank. That's a more disciplined allocation mechanism than typical municipal innovation spending, and it puts real underwriting pressure on Redstone's Nordics team to generate venture-style returns rather than just deploy development capital.

For Redstone as a platform, this is a continuation of a strategy that looks increasingly deliberate: stand up narrow, thematically or geographically defensible vehicles, each with its own LP base and often its own semi-autonomous local GP, under a shared brand and back-office. The Baltic-focused ocean tech fund the firm launched separately under the same Nordics banner follows the same playbook. It's a model that scales AUM without forcing a single generalist fund to stretch across incompatible theses, though it also means Redstone's overall track record will only be as legible as its weakest individual vehicle.

The risk, and it's a real one, is fund size. Ten million euros spread across 15 to 20 companies over five years works out to roughly €500,000 to €650,000 in total capital per company before follow-ons, which is thin even for pre-seed in a lower cost-of-living region. Portfolio companies will need Redstone's broader European network, or outside co-investors, to survive past their first two years. The fund's success will likely be judged less on IRR from this vehicle alone and more on how many of its portfolio companies successfully raise a credible Series A from generalist European deep tech investors.

The Team

Kaj Hagros leads Redstone's Nordics business as Managing Partner, a role he has held since transitioning from operating roles into venture and corporate venturing; before Redstone he was CEO of a Nasdaq Helsinki-listed telecom IT company and earlier held an operating role at FOX Mobile in Berlin, where he first crossed paths with Redstone's founding team. He is also the GP behind Redstone's broader Nordic seed strategy and has been active in the North Karelia region specifically for roughly five years, spanning the firm's first North Karelia vehicle.

North Karelia Growth Fund II is run day-to-day alongside Mikael Myllymäki, described in the fund's own announcement as a portfolio manager on the vehicle; publicly available biographical detail on his prior track record is limited, and Fund Momentum was not able to independently confirm additional background beyond what Redstone has disclosed. Readers should treat his role as regionally focused fund management under Hagros's Nordics umbrella rather than assume a firm-wide general partner title, since Redstone's main leadership roster (Michael Brehm, Samuli Sirén, Lars Haerle and other Berlin-based general partners) does not currently list him.

Early Portfolio

Redstone has not yet named specific companies backed by the new Fund II vehicle. Its predecessor, North Karelia Growth Fund I, launched in 2020 and made 17 early-stage investments in the region; the most visible result to date is Kelluu, a Joensuu-based airship and aerial-imaging company that raised a reported €15 million Series A round in 2026, a strong follow-on signal for a fund of this size even though Redstone's own stake and return multiple on that deal have not been disclosed.

What This Means for Founders

This fund is a fit for a narrow but real slice of founders: pre-seed and seed-stage teams building in semiconductors, photonics, defence-adjacent hardware, or energy transition, who are either based in or willing to anchor part of their operations in eastern Finland, and who need a first check in the low hundreds of thousands rather than a full seed round. The regional LP base (the university, the local cooperative society, the city) suggests genuine hands-on help with hiring, facilities, and local manufacturing partnerships rather than just capital, which can matter more than fund size for hard-tech teams that need lab space or pilot customers before they need a large check.

Founders should go in with realistic expectations about follow-on capacity. This is not a fund that can lead a Series A on its own, so the more useful diligence question to ask before taking the check is who Redstone Nordics and Hagros's network can credibly introduce for the next round, and how many of the North Karelia Fund I portfolio actually got there.

Fund Momentum Take

We like the specificity here more than the size. A fund this small rarely moves the needle on its own, but a repeatable model, professional GP discipline layered onto hyper-local capital and a defensible regional thesis, is exactly the kind of structure that can be replicated across other secondary European tech regions if it works. Redstone is effectively running a portfolio of experiments like this one across its 15 funds, and North Karelia is a useful test case for whether place-based deep tech investing outside the obvious hubs can produce real outcomes rather than just good headlines for the local municipality.

The open questions we'd want answered a year from now: how many of the 15 to 20 planned investments get made in year one versus trickling out over the full five-year window, whether Redstone brings in outside co-investors early enough to de-risk follow-on rounds, and whether Mikael Myllymäki's day-to-day management produces the same regional density of dealflow that Hagros built with Fund I. Our bet is that the LP structure, with the university and city as genuinely engaged partners rather than passive checks, is the fund's real edge, more than the thesis itself.

Frequently Asked Questions

How big is Redstone's North Karelia Growth Fund II?
The fund is €10 million, targeting 15 to 20 early-stage investments in the North Karelia region of eastern Finland over roughly five years.

What does the fund invest in?
It focuses on three areas: semiconductors and photonics, defence and dual-use technology, and energy transition, all at the pre-seed and seed stage.

Who runs the fund?
Kaj Hagros, Redstone's Managing Partner for the Nordics, oversees the fund alongside portfolio manager Mikael Myllymäki, who is publicly described as managing North Karelia Growth Fund II's day-to-day activity.

Is this the same as Redstone's ocean tech fund?
No. Redstone separately runs a roughly €25 million Baltic-focused ocean tech fund under its Nordics arm. North Karelia Growth Fund II is a distinct, regionally focused vehicle with its own thesis and LP base.

What happened with Redstone's first North Karelia fund?
North Karelia Growth Fund I launched in 2020 and made 17 investments in the region, including Kelluu, an airship and aerial-imaging company that reportedly raised a €15 million Series A in 2026.

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