Europe’s agricultural innovation ecosystem is not short of ideas, talent or early‑stage capital. But it remains poorly equipped to bring innovation to market at scale.
That is the central conclusion of a new whitepaper from Tech Tour. Supported by Bayer and informed by input from European financial institutions and policymakers, the report is framed as a call to action.
The whitepaper follows the Tech Tour Resilient Ag 2026 event in Germany, which brought together start-ups, investors and corporates focused on scaling sustainable farming technologies. One workshop, hosted by Bayer, examined how blended finance structures could be used to de‑risk agricultural innovation and unlock larger pools of capital.
The problem is not the availability of money, it concluded, but how it is structured, coordinated and deployed.
The agtech ‘valley of death’
Despite strong public backing for research and early‑stage development, a significant structural gap persists when technologies move from validation to commercial deployment. According to the report, more than €1bn is missing in translating R&D into viable market solutions, while over €3bn is required to bridge the gap between demonstration projects and large‑scale production.
This funding gap is the agtech “valley of death”, where innovations stall not because they lack scientific merit, but because capital arrives either too late, on the wrong terms, or with unrealistic expectations.
Participants in the Bayer‑hosted workshop described a system fundamentally misaligned with the realities of agricultural innovation.
Venture capital return horizons often clash with long development cycles. Corporates tend to engage too late to provide credible exit or offtake pathways. Meanwhile, funding instruments remain fragmented across EU, national and private levels, creating complexity rather than continuity.
Critically, there is no dedicated financing layer to support first‑of‑a‑kind deployment and early scale‑up after validation, leaving companies stranded between early support and commercial growth.
Blended finance as missing middle
The thesis to emerge from the Tech Tour report is that Europe does not need more capital, but better financial architecture.
Blended finance – combining public guarantees, grants, equity and long‑term debt – is identified as the most viable mechanism for closing the scale‑up gap. Properly designed, these structures can absorb early risk and unlock participation from institutional capital that currently remains sidelined.
This shift is already reflected in sentiment across the sector. According to the report, 62% of participants prioritise de‑risking tools and patient capital over traditional funding instruments, signalling increasing appetite for more sophisticated financing models.
The whitepaper sets out concrete priorities for the next 12 to 18 months, including the development of fit‑for‑purpose blended finance vehicles aligned with agricultural timelines, expanded use of guarantees and first‑loss mechanisms, and dedicated pathways to finance first‑of‑a‑kind facilities and scale‑up projects.
Simplifying access to capital and improving coordination between public and private actors is equally critical, the report argues, particularly as agricultural resilience becomes central to economic stability, climate adaptation and food security.
Industry backs the case for change
Industry voices echoed the report’s conclusions.
“Classical agtech investments often don’t fit the timelines or return expectations of traditional venture capital funds,” said Katrien Swerts, executive director at Rabo Investments. “This creates a chicken‑and‑egg problem: investors want grants, grants require equity, and lenders want offtake agreements before financing.”
Alejandra Manzanares Bertrán, senior loan officer at the European Investment Bank, added that the bottleneck lies beyond innovation itself. “The real challenge is financing the transition from demonstration to first‑of‑a‑kind facilities. To attract private capital, we need the full capital stack: grants, nondilutive funding, equity and long‑term debt.”
“For pension funds and family offices, blended finance can improve bankability and unlock participation,” she said, pointing to large pools of capital currently sitting on the sidelines.
Bayer’s ESG investment director for regenerative agriculture, Sami Khan, said Europe could learn from development finance models used in emerging markets. “Blended finance allows a diverse set of investors to come together to deliver innovative outcomes at scale. But it is not a magic solution – it only works when the right partners, policies and market conditions align.”
A global echo from FAO
The Tech Tour report’s conclusions are mirrored in a separate investment brief published by the UN’s Food and Agriculture Organization. Titled Dos and don’ts of blended finance in agri-food systems: The case of investment funds, the FAO analysis focuses on how blended finance can better support agri-food systems in developing countries.
FAO deputy investment centre director Nuno Santos said the transition to sustainable agri-food systems remains severely underfinanced. While blended finance is frequently cited as a solution, existing funds remain small and fragmented relative to global need.
Based on analysis of EU‑supported funds and 70 interviews with investors and donors, the FAO brief aims to distil practical lessons on how blended finance can be deployed more effectively.
Together, the two reports paint a consistent picture: the technologies and capital exist. What is missing is a coordinated approach to risk‑sharing, scale‑up finance and long‑term deployment. If Europe wants its agtech innovation to translate into impact, both argue, blended finance must move from theory into practice.
