In light of a growing population and dwindling resources due to climate change, alternative protein sources for the production of new foods are becoming increasingly important. Their range is broad: legumes, algae, fungi and insects as well as proteins obtained through cell-based or fermentative processes are suitable as raw material sources for a healthy, environmentally conscious and sustainable diet. The development of innovative foods based on alternative proteins has also become attractive to investors.

Investments in German companies have risen significantly

According to the Good Food Institute Europe (GFI), European companies that produce meat and dairy alternatives based on plants, fermentation and cell cultivation were able to attract investments totaling EUR 289 million in the first half of 2024. At a total of EUR 74 million, more than twice as much venture capital was invested in German companies alone as in the whole of 2023. In the previous year, investments amounted to EUR 28 million.

In the past year, however, the sector in Germany has grown less through venture capital and more through investments and partnerships from established industrial and food companies, according to the report. A major investment of over 100 million euros by Nordzucker is cited as an example. According to GFI, the restrained investment activity of the past year will now be made up for by the revival of venture capital in the first months of 2024.

Carlotte Lucas, Head of Industry at GFI Europe, comments: “Venture capital has been crucial for the growth of innovative companies producing food based on plants, fermentation and cultivation. However, for the sector to make a decisive contribution to food security, sustainability and economic strength in Europe, new financing approaches and greater cooperation with established players in the food industry will also be required in the future.”

Largest investments in the fermentation sector

According to GFI, the majority of financing goes into the sector of fermentation, fermentation technology or precision fermentation. In the field of fermentation, in which microorganisms are used to produce innovative foods, European companies were able to raise investments of EUR 164 million in the first six months of 2024. This is just over half of all financing in the novel food sector and significantly more than the EUR 100 million invested in this area in 2023 as a whole. 115 million of this was invested in biomass fermentation alone - such as the production of mycoproteins using fungi - and €49 million in precision fermentation - such as the production of real egg and milk proteins using yeast.

A large proportion of European investments in the field of fermentation went to German companies. The Hamburg-based biotech start-up Infinite Roots raised 53 million euros and ProteinDistillery from Ostfildern 15 million euros. Both companies use biomass fermentation to obtain mycoproteins for the production of sustainable food and utilize side streams from the food industry, including from beer brewing. According to GFI, many of the companies active in the field of fermentation are using the money to drive forward the scaling and development of infrastructure.