Dry powder ready for deployment in European agrifoodtech

[Disclosure: AgFunderNews’ parent company is AgFunder.]

“Self-sufficiency” and “resiliency” are top of mind for Europe’s food and agriculture industries right now thanks to US President Trump’s growing trade war and anti-European comments, combined with climate change impacts like the 2024 floods and heatwaves.

Just this week, the European Commission told the public to stockpile at least 72 hours’ worth of “critical supplies” to prepare for “risks including natural disasters, cyber attacks and geopolitical crises, including the possibility of armed aggression against EU countries.”

It follows, then, that those investing in European agrifoodtech startups will be evaluating prospective startups with a resiliency lens at hand when deploying capital.

And yes, there is a bit of capital to deploy, despite the global decline in agrifoodtech funding as outlined in AgFunder’s latest Global AgriFoodTech Investment Report.

In Europe, agrifoodtech funding dropped 29% in 2024, from $5.4 billion in 2023 to $3.8 billion; deal count fell 27% over the same time, from 582 to 423, respectively. This is against the backdrop of a far more modest decline—4%—in global agrifoodtech funding over the same period.

While still nowhere close to the $11 billion raised in outlier year 2021, European funding is nonetheless ahead of where it was in 2020 ($3.1 billion) and 2019 ($3.5 billion), reverting to that pre-Covid and pre-crazy valuation time some commentators refer to as the mean.

Removing the UK—which raised just under $650 million—in 2024, from the data, the total figure is just over $3.1 billion.

Funding over time hovers near the $1 billion mark, excepting 2021 when the difference is $2 billion. A decline in deal count is more pronounced from 2023 to 2024 once the UK is removed from the data:

Some even believe a recovery is in the works in 2025. “Things can only go in one direction: up,” says Sweden Foodtech founder Johan Jörgensen. Likewise, some 50% of venture capitalists we surveyed believe the recovery has started.

Jörgensen likens the last few years to a “tidying up” of sorts after the excess years of cheap money and inflated valuations.

“We seem to be pretty done with that, and we can start to look forward again to putting capital towards new investments instead of just saving what we have,” he says.

However, Max Brandes, investment manager, venture capital at Germany’s Rentenbank, says that he doesn’t see “a significant change” in the funding situation over the next 12 months and that there may be further drops in valuations.

That said, Brandes also notes that, “there’s quite a lot of dry power, and this somehow needs to be allocated over the next years, and this can probably have a positive effect also in the funding situation of startups.” (Dry powder refers to uninvested fund capital awaiting deployment.)

“The trillion euros are there,” adds Jörgensen, referring to the money earmarked for the European Green Deal, which includes the food system. “The only question is, how it’s going to be deployed, when and where?”

Which brings us back to resilience.

‘If logistics are disturbed, we’re toast’

In Europe, “Investment in agrifood technology has followed broader market contractions recently, but we’re seeing increased focus on what we call ‘critical foodtech,’” says José Luis Cabañero Gutiérrez, CEO of the investment and accelerator program Eatable Adventures in Spain.

That includes “technologies essential for food security, supply chain resilience, and agricultural sustainability that address concrete market needs rather than speculative growth.”

Resiliency is considered so critical that it forms a major component of the European Commission’s Vision for Agriculture and Food published earlier this year. Among other things, the Vision aims to strengthen Europe’s standardization and food safety, reduce dependencies on imports for critical goods, and diversify trade relations.

The latter is especially relevant right now given the Trump administration’s tariffs and general uncertainty around EU-US relations. Throw the war in Ukraine’s impact on energy prices into the mix, and more vulnerabilities float to the surface.

“Making sure our food systems are resilient will drive a lot of the investment going forward: how can we make sure we have enough food if times are bad,” says Jörgensen.

For example, he adds, “If logistics are disturbed, we’re toast in so many ways. Resilience is big and it has to be driven by the fact that we have such low self-sufficiency [in Europe], so there will be investments coming to more food production.”

Some, though not all, of 2024’s top rounds for European agrifoodtech startups reflect the focus on resiliency.

Finnforel, which operates a “recirculating aquaculture system” that helps better control trout-farming environments for year-round fish farming, raised $260 million from Mitsubishi and others last year. Its “Gigafactory” concept also brings processing and packaging onsite, which the company says cuts down logistical complications while also lowering costs, supporting local food systems, and reducing carbon footprint.

In the Bioenergy category, Lithuania-based Green Genius landed a $110 million late-stage deal from the European Bank for Reconstruction and Development (EBRD) to fund its European expansion plans.

Downstream category eGrocery accounted for three of the five top rounds—a somewhat surprising fact, considering investor emphasis on decarbonization, climate adaptation, and food security. “Resilience” isn’t the word to spring to mind when one is talking about 10-minute delivery of consumer goods.

Jörgensen has a simple answer for eGrocery startups’ continued presence: “They grow in a predictable way, have assets that will retain value even if everything goes south, and are investable compared to the alternatives.”

In 2024, eGrocery startups raised $792 million across 20 deals, down from roughly $1.1 billion and 42 deals the previous year and $1 billion in 2022.

Thanks to a few mega-rounds, eGrocery was the top category in Europe in 2024, followed by a few upstream categories including Innovative Foods, which includes meat and dairy alternatives.

Midstream technologies’ high standing is thanks to one $800 million round for UK-based Dexory, which develops robotic solutions for the logistics sector.

Country spotlight: Germany

Germany was the fifth-highest-funded country among developed markets in 2024. Startups raised $561 million, down 32% from the previous year; the decline is in keeping with macro trends.

Rentenbank’s Brandes says that while Germany has “a very strong agritech industry and a lot of export products,” the focus is often on venture clienting (using a startup’s product instead of investing), rather than venture capital.

The EU’s strict regulatory policies are often seen as roadblocks to innovation, and while this can be true in Germany, in some cases, it’s the opposite, he adds.

“For example, in regenerative agriculture, I would say Germany is ahead of many other countries, and this is highly driven due to regulation. It’s the case for the European Union, but especially also in Germany, and also driven by changing consumer needs and the willingness to pay for premium products. The same is true for animal-welfare technologies.”

One thing Brandes says he would like to see change in is the country’s fragmented startup ecosystem.

“For agriculture, we have, for example, about 20 universities and nearly as many hubs. It is really hard to bring all this together to one network, and this makes it hard for VCs to get access to early-stage companies.”

Rentenbank helps address this through its Growth Alliance initiative, which runs multiple programs for supporting agrifood startups. Via its Idea Camp, Startup Bootcamp and Accelerator Program, the Growth Alliance offers access to mentorship as well as connections with business, academia, and politics.

Investment trends to watch

“The most promising companies are those directly addressing food system vulnerabilities exposed during recent global disruptions while demonstrating clear paths to profitability,” says Gutiérrez at Eatable Ventures.

“To that end, we’re witnessing strategic capital concentration in precision agriculture systems that optimize resource utilization, climate-adaptive crop technologies, natural ingredient alternatives aimed at decreasing chemical use, side streams repurposing via circular solutions, and digital platforms that genuinely enhance supply chain transparency and efficiency.”

Jörgensen also mentions side streams as an important area for agtech, particularly when it comes to big industrial projects.

He namechecks alternative proteins and health-related offerings as areas to watch. Sweden-based Vitamin Well’s exit in 2024 has helped propel interest in the latter, he notes.

Functional and sustainable ingredients are also top of mind for Beatriz Jacoste Lozano, director of Spain’s KM Zero Food Innovation Hub.

“Most are biotech-driven, often leveraging precision or biomass fermentation to improve the nutritional profile or functionality of food,” she notes. “This includes innovations around sugar and salt reduction, probiotics, and postbiotics.”

“We’re also seeing strong demand from food corporates, driven by consumer pressure and supply chain challenges.”

She also mentions B2B SaaS and AI as they are applied to food.

“These startups solve operational pain points—from supply chain optimization to market intelligence, food waste, and carbon tracking,” she says. “This space offers faster paths to revenue and exits, making it low-hanging fruit for investors looking to re-engage.”

Meanwhile, some of the current recovery can be attributed to institutions like EIC, which has funded multiple startups to support their scaling she adds.

“This highlights the critical role of public funding (grants and equity-free mechanisms) in sustaining innovation in the medium term. Still, private capital remains largely on the sidelines.”

For private investment to re-accelerate, three conditions must be met, she says: valuation corrections, market adoption, and more exits.

“This is the ultimate trigger,” she says of the latter. “We need to see relevant exits to bring back generalist and crossover investors. The recent news of CookUnity’s upcoming IPO is encouraging—if successful, it could become a key catalyst for renewed investor interest in the sector.”