From Venture Capital to Industrial Policy: The Shifting Landscape of Alternative Proteins

The alternative protein sector has reached a critical inflection point. What began as a venture capital-driven phenomenon in the 2010s is undergoing a fundamental transformation: one that has significant implications for policymakers, researchers, and entrepreneurs alike. The question is no longer whether alternative proteins will play a role in future food systems, but who will lead their development and on what terms.

The Rise and Fall of Venture Capital Enthusiasm

The alternative protein sector experienced a remarkable venture capital cycle over the past decade. Total FoodTech investment peaked at $54 billion in 2021, representing the apex of the sector’s funding enthusiasm. The subsequent correction proved swift: investment fell 48% to $27.9 billion in 2022, declined further by 54% to $12.7 billion in 2023, before showing modest recovery to $16 billion in 2024. For 2025, first-half data suggests continued decline with projections around $11 billion for the full year (DigitalFoodLab, 2025). From peak to projected trough, this represents a decline of nearly 80%.

This trajectory reflects broader macroeconomic conditions, particularly the shift from the low-interest-rate environment of 2020-2021 to rising rates that fundamentally altered venture capital economics. For alternative protein companies, many of which require extended development timelines and substantial capital expenditure before reaching profitability, the changed environment proved particularly challenging.

The negative post-COVID trend was then intensified by the AI boom, which has been the main attraction for venture capital in recent years. Capital that might have flowed to deep-tech food innovation has been redirected toward artificial intelligence, where the promise of faster returns is more compelling to investors operating under typical 7-10 year fund horizons. This crowding-out effect has exacerbated the funding crisis for alternative protein companies at precisely the moment when many needed capital to scale.

The investment decline has produced significant casualties. Believer Meat has ceased operations. Beyond Meat experienced a torrid year with its stock price declining by more than 95% from its all-time high. Miyoko’s Creamery entered insolvency and was auctioned to the highest bidder (Watson, 2025). These are not isolated failures but symptoms of a sector-wide correction that has called into question whether venture capital represents the appropriate financing mechanism for food system transformation.

Public Research Takes the Baton

While private capital retreats, a different picture emerges in public research. The ecosystem mapping conducted for the RISC project (Leo, 2025), covering more than 70,000 observations including scientific publications, startups, and EU-funded research projects, reveals a significant increase in academic activity around alternative proteins in recent years. The number of publications grew by approximately 57% between the 2014-2019 and 2020-2025 periods.

More instructive than the aggregate growth is its geographic distribution. While Europe held the largest share of scientific publications in the field in 2014 – 2019 at nearly 23%, the subsequent period saw Asia accelerate dramatically. The European share declined slightly to 21.6%, while the Asian share grew to 28.2%. The United States, by contrast, saw research output grow by only 7% between the two periods: a near-stagnation relative to global trends.

At the country level, the contrasts are even starker. China’s research output grew by 184% between the two periods, indicating strong institutional backing and a strategic commitment to building knowledge infrastructure in this domain. South Korea increased its share from 4.6% to 6.4% while : and this is the crucial point : explicitly including alternative proteins in its national economic development plans.

This pattern, declining private investment in the West coupled with accelerating public research in Asia, signals a potential rebalancing of innovation capacity. The next generation of industry leaders may emerge from outside traditional North American and European centres. For European policymakers concerned with food system resilience and technological sovereignty, these trends warrant serious attention.

Interestingly, the topics that dominated startup activities throughout the 2010s have been gaining traction in academic research precisely in the 2020-2025 period – exactly the timeframe in which startups have been struggling. This suggests both that academic efforts are motivated by and may follow startup activities, and that these topics still hold technological opportunities that have yet to be discovered. Academic research may now and in the future provide more impetus for companies that have been struggling in scaling precision fermentation or cultivated meat production.

Industrial Policy Enters the Arena

There are now clear signs that governments are becoming more active in this space, viewing alternative proteins not merely as a market development to be observed but as an opportunity for strategic industrial policy. The logic is straightforward: the market for substitutes to animal products is enormous, the environmental and health imperatives for food system transformation are compelling, and the technologies involved – plant-based processing, precision fermentation, cultivated meat – represent domains where competitive advantage can still be established.

Several countries have already moved in this direction. Israel has positioned itself as a hub for all alternative protein technologies, with substantial government support for research and regulatory innovation. Denmark published a comprehensive action plan for plant-based foods in 2023, the first of its kind in Europe. The United Kingdom has invested in alternative protein research through its public funding bodies. Germany has seen growing policy attention to the sector, albeit without a comprehensive national strategy.

Yet it is in Asia where industrial policy ambitions appear most pronounced. The increase in research output from China (184% growth) is not accidental but reflects deliberate resource allocation. The heatmap of research activities suggests that China is building capacity across the full spectrum of alternative protein technologies.

South Korea: A Case Study in Proactive Industrial Policy

South Korea offers a particularly instructive example of what proactive industrial policy in this domain can look like. It was among the first countries worldwide to develop an action plan positioning its agricultural sector to benefit from developments in alternative proteins. The approach is notable for being dual-track : addressing both cultivated meat and plant-based products through distinct but coordinated policy instruments.

On the cultivated meat side, Korea has established the Gyeongbuk Regulatory-Free Special Zone – a globally unique arrangement where companies can develop and test cultivated meat products without the approval barriers that characterise most regulatory environments. This regulatory sandbox for innovation has already attracted attention from European companies seeking to escape the uncertain regulatory situation in the EU. The German company Infinite Roots, for instance, has expanded into South Korea precisely for this reason.

On the plant-based side, Korea is launching a new centre for plant-based products in 2026 – another building block of a comprehensive national strategy. The country has already registered more than 3,000 vegan products and is actively seeking international partners for collaboration.

What makes the Korean case particularly relevant for European observers is not only the specific policy instruments deployed but the underlying strategic logic. Korea has recognised that alternative proteins represent both a response to food system externalities and an industrial opportunity to be seized. Rather than treating these as separate domains – environmental policy here, industrial policy there – Korea has integrated them into a coherent national strategy supported by both the Ministry of Food and Drug Safety and the Ministry of Agriculture, Food and Rural Affairs.

This stands in contrast to European approaches, which have been characterised more by regulatory caution than by strategic ambition. The European alternative protein sector, which remains one of the few emerging technology domains where Europe holds a leading position globally, risks being overtaken not by market forces but by strategic industrial policy pursued elsewhere.

Observing Policy Innovation Firsthand

The patterns described here – i.e. the shift from private to public funding, the geographic rebalancing of research capacity, the emergence of industrial policy as a driver of sectoral development – raise important questions for anyone concerned with the future of food systems. What can be learned from countries that are taking proactive approaches? How do regulatory sandboxes function in practice? What does it take to develop a coherent national strategy for alternative proteins?

These questions are difficult to answer through reports and publications alone. Direct observation offers insights that secondary sources cannot capture.

This June, cbased is organising a four-day study tour to South Korea designed specifically for decision-makers, researchers, and innovators. The programme includes exclusive access to the Gyeongbuk Regulatory-Free Special Zone, meetings with Korean policymakers and ministry officials, visits to leading alternative protein companies, and structured exchanges with Korean researchers.

The timing is opportune: participants will witness the launch phase of Korea’s new plant-based innovation centre while the cultivated meat regulatory sandbox is fully operational. For those working at the intersection of food policy, research, and innovation, this represents a rare opportunity to observe policy development in real-time.

The group is limited to 15-25 participants to enable intensive discussions and high-quality networking. Early registrations are crucial not for administrative convenience but because confirmations of institutional visits depend on demonstrated participant commitment.

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Hannes Leo is CEO of cbased, a research consultancy focused on evidence-based policy at the intersection of innovation, digitalisation, and sustainable food systems. The analysis presented here draws on the RISC project, supported by the Austrian Central Bank Anniversary Fund (project number 18757).

Korea Study Tour : 29.06. – 02.07.2026

4 days | Seoul & Gyeongbuk | €2,500 (includes programme, stays at hotels outside Seoul, transfers)

References

DigitalFoodLab (2025). 2025 State of the Trends Shaping the Future of Food. DigitalFoodLab.

Leo, H. (2025). Who is disrupting the food value chain: Regulators, Incumbents, Startups or Consumers? Mapping the Alternative Protein Ecosystem and its Disruptive Potential. RISC Project, supported by the Oesterreichische Nationalbank (Austrian Central Bank, Anniversary Fund, project number 18757). cbased.

Poore, J., & Nemecek, T. (2018). Reducing food’s environmental impacts through producers and consumers. Science, 360(6392).

The Lancet Commission (2019). Food in the Anthropocene: The EAT-Lancet Commission on healthy diets from sustainable food systems. The Lancet, 393(10170).

Watson, E. (2025). Agrifoodtech in 2025: What broke, what bent and what might still work. AgFunderNews.