Innovative financing mechanisms for alternative proteins in Europe

Executive summary

Alternative proteins – including plant-based foods, cultivated meat, and ingredients made using fermentation – are essential for building a more resilient, sustainable food system. But while technological advancement is moving rapidly, financing mechanisms have not kept pace with the sector’s needs. Europe’s alternative protein sector is entering a new phase that demands capital not just for innovation, but for scale. For investors, this presents a unique opportunity to back a high-impact, fast-evolving sector with strong alignment to climate, health, and ESG goals.

This report identifies how innovative, public and blended finance tools can be leveraged to address critical funding gaps, particularly in infrastructure, scaling, and commercialisation stages. Drawing lessons from comparable sectors and regions, and offering actionable recommendations for investors, policymakers, and financial institutions, it outlines a reccommended roadmap for mobilising more capital, opening new investment channels, and accelerating market development across the value chain.

Why investors should get behind alternative proteins:

Strong fundamentals: Growing consumer demand, improved tech maturity, and urgent policy drivers tied to climate and food security.

Underfinanced infrastructure: A clear capital gap in mid- to late-stage funding, manufacturing capacity, and enabling R&I.

Untapped potential of innovative financing mechanisms: Through instruments like first-loss capital or guarantees, public and mission-driven finance can absorb early risk, crowd in private investment, and provide exit pathways.

Key recommendations for the alternative protein funding ecosystem in Europe:

• Create a market: One of the main challenges for alternative proteins is creating a viable market by using market-shaping instruments and strategic investments in adjacent sectors to reduce risk, lower costs, and demonstrate commercial potential. This would ultimately break the cycle where investors await proof and startups await funding.

• Derisk: Public-private collaboration through blended finance is key, as public involvement signals long-term support, attracts private capital, and has historically proven effective (such as in the clean energy sectors) by sharing risks and catalysing large-scale funding.
• Collaborate: To overcome fragmentation in the alternative protein sector, collaboration among all stakeholders (including investors, startups, governments, and corporates) is essential to reduce risk, foster innovation through shared infrastructure like open-access pilot plants, and form strategic partnerships that improve scalability, cost-efficiency, and long-term industry growth.
• Be creative: Scaling alternative proteins requires creative, tailored financing – there’s no one-size-fits-all solution, so success depends on combining available funding mechanisms into hybrid approaches that align with each project’s specific stage, scale, goals, and investor expectations.

Methodology:

• Desk research on current financing gaps, funding challenges and opportunities.
• Market mapping of the current financing landscape for alternative proteins in Europe.
• Cross-sectoral case studies and global benchmarking to illustrate how catalytic capital has accelerated innovation in other industries and regions.
• Analysis to assess the transferability of these examples to alternative proteins in Europe.

These reflections aim to serve as a foundation for further discussions among public and private investors and finance professionals within companies. As financing alternative protein infrastructure projects is still quite a new topic, we expect more financing mechanisms to be identified with time.