PowerPoint Presentation

1 Introduction to the Funding Ecosystem in Digital Agriculture.

[Audio] Welcome to this training module on funding in Digital Agriculture. Digital transformation is rapidly reshaping how food is produced, monitored, and managed across Europe. From precision farming and automation to real-time crop monitoring, AI-based decision tools, and climate-smart systems, innovation in agriculture is accelerating at an unprecedented pace. However, technological innovation alone does not create impact. Innovation only creates value when it is adopted in real environments and scaled across ecosystems. And this is where funding becomes critical. Funding is not just about money. It is what enables ideas to move from laboratories to farms, from pilots to markets, and from experimentation to long-term sustainability. Throughout this module, we will explore how different funding mechanisms support — or sometimes limit — this journey in Digital Agriculture.

[Audio] Digital Agriculture offers powerful solutions to some of the most pressing challenges facing European agriculture: climate change, resource scarcity, labour shortages, and the need for more resilient food systems. Yet, innovation in agriculture is capital-intensive and risky. Developing digital tools requires upfront investment in hardware, software, data infrastructure, and skills. Testing these solutions requires pilots, demonstrations, and engagement with farmers — often over multiple seasons. Funding determines whether innovation remains an idea, a prototype, or becomes a solution that is actually used in the field. Without adequate funding, even the most promising technologies struggle to move beyond the pilot phase. This is why understanding the funding ecosystem is not optional. It is essential for anyone involved in research, innovation, policymaking, advisory services, or entrepreneurship in Digital Agriculture..

[Audio] Today, access to finance remains one of the most significant barriers to innovation uptake in agriculture — a finding consistently highlighted by institutions such as the European Investment Bank. Agriculture is often perceived as high-risk by financial institutions. This leads to restricted lending, conservative investment decisions, and limited credit availability, especially for small and medium-sized farms and agri-tech innovators. At the same time, digital technologies require substantial upfront capital expenditure and ongoing operational costs. Most farmers cannot self-finance these investments. Public funding plays a crucial role in supporting research and early innovation, but it is not designed to fully cover commercialization and scale-up. Private capital is needed for that — yet it often enters too late or under restrictive conditions. The result is a fragmented funding landscape, where many solutions remain stuck in the pilot phase, unable to bridge the gap between innovation and adoption..

[Audio] The trajectory of Digital Agriculture is largely determined by how and where funding flows. Public funding at EU and national level typically pushes innovation forward by reducing early-stage risk. It supports research, experimentation, pilots, and demonstration activities in real environments. Certain EU instruments are specifically designed to bridge the gap between prototypes and markets, helping innovations mature and become investment-ready. Once solutions demonstrate value, private capital and market actors pull innovation into the market by supporting adoption at scale, integration into value chains, and long-term commercial sustainability. Importantly, policy frameworks do not fund innovation directly, but they shape the conditions that make adoption possible — through incentives, standards, skills, and regulatory clarity..

[Audio] Europe's funding ecosystem for agriculture and digital innovation is composed of multiple layers. At the EU level, the Common Agricultural Policy remains the most extensive funding instrument, supporting farm modernization, sustainability practices, digitalisation, and risk reduction. Horizon Europe plays a complementary role by financing research, experimentation, prototypes, and digital technology pilots. EIT Food and other Knowledge and Innovation Communities support entrepreneurship, SME pilots, market validation, and early commercial readiness. The LIFE Programme provides funding for environmentally focused digital solutions, such as climate adaptation, water and soil monitoring, and biodiversity technologies. At the national and regional levels, Member States provide research and innovation programmes, modernization grants, SME digitalisation support, and local pilot funding. ERDF and Smart Specialisation Strategies enable territorial innovation through regional agri-food hubs, digital infrastructure, and technology deployment in specific regions. The private sector is equally important. Commercial banks remain the primary channel for capital expenditure on farms, financing machinery, irrigation, and digital equipment — often supported by leasing from machinery manufacturers. Venture capital funds scalable agri-tech start-ups in robotics, AI, IoT, automation, and data platforms. Private equity supports mature agri-food companies and sustainability-driven transformations. Corporate investors — including machinery companies, input providers, processors, and retailers — accelerate scaling by integrating digital tools into supply chains and machinery platforms. Cooperatives mobilise collective financing for shared digital assets and services. Together, these layers form a rich but complex funding ecosystem that shapes the development, deployment, and scaling of Digital Agriculture across Europe.

[Audio] EU-level public funding plays a foundational role in Digital Agriculture by reducing risk and setting strategic direction. These instruments are not designed to replace markets, but to correct market failures — particularly in early-stage innovation, systemic transitions, and public-good outcomes such as sustainability and climate resilience. EU funding creates the conditions under which innovation can emerge, mature, and become attractive to private investment. However, public funding alone is not sufficient. It must be translated into adoption, scale, and long-term impact through complementary funding mechanisms..

[Audio] The Common Agricultural Policy is the EU's largest agricultural funding instrument and a key lever for technology adoption at farm level. Through national CAP Strategic Plans, the CAP supports income stability, eco-schemes, farm modernisation, and sustainability. Digitalisation is eligible under Pillar II, particularly through the European Agricultural Fund for Rural Development. CAP funding can support investments in equipment, irrigation systems, software, precision farming tools, and training. Its most important role in Digital Agriculture is risk reduction. By lowering financial barriers, the CAP enables farmers to adopt digital solutions that they would otherwise not be able to finance..

[Audio] Horizon Europe is the EU's main research and innovation programme and the backbone of Digital Agriculture R&D at European level. It supports research, prototypes, pilots, living labs, and demonstration projects across a wide range of digital agriculture technologies, typically covering TRL levels 3 to 8. Cluster 6 focuses on food systems, climate resilience, natural resources, and digitalisation. Beyond funding technology, Horizon Europe builds cross-border collaborations among universities, SMEs, technology providers, and farmers, ensuring that innovation is co-created and tested in real-world conditions..

[Audio] The LIFE Programme is the EU's funding instrument dedicated to environmental and climate action. While not a technology programme per se, LIFE plays a crucial role in Digital Agriculture by supporting pilots, demonstrations, and best practices that contribute to sustainability, climate mitigation, and adaptation. LIFE supports nature and biodiversity protection, circular economy solutions, climate-smart land use, energy efficiency, and clean energy transition. In Digital Agriculture, LIFE often complements R&I funding by demonstrating how digital tools can deliver environmental and climate outcomes, helping attract further public and private investment..

[Audio] The Digital Europe Programme is the EU's main investment instrument for deploying digital technologies at scale. Unlike Horizon Europe, which focuses on research and innovation, DEP focuses on capacity building — making sure that digital technologies are actually available, usable, and deployable across Europe. With a budget of €7.5 billion for the 2021–2027 period, DEP invests in core digital infrastructures such as artificial intelligence, data spaces, high-performance computing, cybersecurity, and advanced digital skills. In the context of Digital Agriculture, DEP plays a foundational but often invisible role. Digital farming cannot scale without trusted data sharing, cloud-edge infrastructures, secure connectivity, and AI systems that work reliably in real operational environments. DEP funds exactly these enabling layers. Examples include agricultural data spaces, AI testing and experimentation facilities, high-performance computing platforms for modelling and forecasting, and cybersecurity frameworks for connected farms. The key point to remember is this: DEP does not fund research prototypes. It ensures that innovations developed under Horizon Europe or national programmes can be deployed, interoperable, and scaled across regions and value chains. In this sense, DEP is the infrastructure backbone of Digital Agriculture in Europe..

[Audio] EIT Food is part of the European Institute of Innovation and Technology, which operates through Knowledge and Innovation Communities — or KICs. These are long-term, pan-European partnerships designed to strengthen Europe's innovation capacity by connecting research, education, business, and society. Unlike Horizon Europe, which prioritises research and early-stage technological development, EIT Food focuses on innovation that is already closer to the market. Typical activities include SME pilots, technology validation at TRL 6 to 8, product testing, and business model refinement. EIT Food is also a major actor in entrepreneurship and skills development. It runs incubators, accelerators, training programmes, and advisory services that support startups, scale-ups, and innovators across the agri-food system. Importantly, EIT Food funding usually requires co-financing from partners. This ensures that projects are market-driven and that participants have a real stake in commercial outcomes. In Digital Agriculture, EIT Food helps bridge the gap between innovation and market readiness — supporting solutions that are technically validated, economically credible, and embedded in a broader European ecosystem..

[Audio] InvestEU, together with the European Investment Bank and the European Investment Fund, represents the EU's main financial instruments for mobilising large-scale public and private investment. These instruments do not fund research. Instead, they de-risk investment. Their purpose is to make it easier for banks, investors, and financial institutions to finance innovative, green, and digital technologies that would otherwise be considered too risky. Digital Agriculture is a capital-intensive domain. It requires investment in machinery, precision equipment, IoT networks, renewable energy systems, storage, processing, and climate-smart infrastructure. At the same time, agriculture is often perceived by lenders as high risk. InvestEU, the EIB, and the EIF address this challenge by providing guarantees, blended finance, and equity backing. This enables lower-interest loans for farmers and agri-SMEs, unlocks private bank lending, supports agri-tech investment funds, and finances regional or cooperative projects. These instruments are essential for scaling digital solutions beyond the pilot stage — particularly where private capital alone would not enter without public risk-sharing..

[Audio] The European Innovation Council is the EU's flagship programme for supporting high-risk, high-impact innovation. It targets technologies that are too uncertain for conventional funding but have the potential to transform entire sectors — including agriculture. The EIC operates through a structured pipeline. The Pathfinder funds early-stage, radical ideas and proof-of-concept research where commercial applications are still unclear. The Transition instrument then takes promising research results and supports technology validation, demonstration, and early business development — a critical phase for moving innovations out of the lab. Finally, the Accelerator supports startups and SMEs with market-ready technologies, providing blended finance — combining grants and equity — to support scaling, market entry, and international growth. Together, these instruments form a coherent pathway from breakthrough research to real-world deployment. In Digital Agriculture, the EIC is a key bridge between public research funding and private investment..

[Audio] So far, we have looked at how EU-level funding instruments create innovation potential in Digital Agriculture — through research funding, breakthrough technologies, and digital infrastructures. However, innovation alone does not create impact. For technologies to deliver value, they must be adapted to local conditions, supported by regional ecosystems, and adopted by farmers and agri-food actors. This is where national and regional instruments become critical. They translate European innovation into real-world deployment, enabling skills development, local investment, and long-term adoption. In the next part, we move from EU-level programmes to the instruments that operate closer to regions, farms, and local ecosystems..

[Audio] National Research and Innovation programmes are public funding schemes managed by Member States. Most of them existed before EU Framework Programmes, but over time they have evolved to align strongly with European priorities such as the Green Deal, CAP objectives, and digital transformation. Their main role in Digital Agriculture is applied research and early validation. These programmes typically fund: feasibility studies, pilots, proof-of-concept activities, and early deployment trials adapted to national or local conditions. Unlike Horizon Europe, which often works at a pan-European scale, national R&I programmes are closer to local farming systems, regulatory contexts, and market realities. This makes them particularly effective for adapting digital solutions—such as decision-support tools, sensors, or farm management platforms—to real operational environments. Another key role of national R&I programmes is complementarity. They do not replace Horizon Europe; instead, they: co-finance projects, pool resources with EU instruments, and align national innovation strategies with the European Research Area. From a system perspective, national R&I programmes act as bridges: they take ideas developed at EU level and test whether they actually work in practice—with local farmers, SMEs, cooperatives, and advisory services..

[Audio] The European Regional Development Fund is a core instrument of EU Cohesion Policy. Its objective is to strengthen regional economies, reduce disparities, and support innovation and competitiveness at territorial level. ERDF is managed by regions or Member States through Operational Programmes. This allows investments to be tailored to local needs, economic structures, and innovation capacities. Over time, ERDF has evolved into a powerful tool for digitalisation and the green transition, closely aligned with Smart Specialisation Strategies. Regions invest in sectors where they have comparative advantages, such as agri-food, bioeconomy, or smart farming. In Digital Agriculture, ERDF funds innovation hubs, digital platforms, testbeds, living labs, and SME capacity building. While CAP supports farmers directly, ERDF builds the surrounding ecosystem that makes adoption possible. ERDF therefore acts as a bridge between European research, national strategies, and sustained regional deployment..

[Audio] AKIS—Agricultural Knowledge and Innovation Systems—is not a funding programme. It is a policy and coordination framework, formally embedded in the current Common Agricultural Policy. AKIS brings together all the actors involved in generating, sharing, and using knowledge in agriculture: farmers, advisors, researchers, educators, innovation providers, and public institutions. Its purpose is to ensure that innovation actually reaches the field. In Digital Agriculture, this role is especially important. Digital tools require: new skills, behavioural change, trust in data and technology, and ongoing support after installation. AKIS provides this human and institutional layer. Through advisory services, training programmes, demonstration activities, and peer learning, AKIS helps farmers understand: why a digital solution is useful, how to use it effectively, and how to integrate it into daily farming operations. Under the 2023–2027 CAP, AKIS is a cross-cutting objective, meaning it connects multiple funding streams—CAP measures, national programmes, ERDF projects, and EU-funded innovations—into a coherent system. From a funding ecosystem perspective, AKIS is the last mile. It does not finance technologies directly, but it enables adoption by reducing uncertainty, building skills, and creating trust..

[Audio] These instruments do not operate in isolation. Together, they form a connected public funding and support ecosystem for Digital Agriculture. National R&I programmes develop and test new digital solutions. ERDF strengthens the regional environment through infrastructure, hubs, and coordination. CAP supports farm-level adoption by reducing financial risk. AKIS ensures that innovation is understood, trusted, and used through advisory services and training. National promotional banks and financial instruments then provide leverage through loans and guarantees. Combined, these instruments create a continuous pathway — from innovation development to regional deployment, farm-level adoption, and long-term scaling across Europe..

[Audio] After examining public and policy-driven funding instruments, we now turn to private funding mechanisms. Private funding plays a complementary role in Digital Agriculture. Its primary function is not to create innovation, but to scale solutions that have already been validated. Banks, investors, and corporate actors typically engage once technologies are proven, trusted by users, and considered economically viable. They focus on risk management, return on investment, and long-term sustainability. Private funding does not replace public support. It does not finance basic research, nor does it guarantee adoption. Instead, it enables replication, continuity, and market integration where conditions allow. Understanding this distinction is essential for designing realistic funding strategies and for moving Digital Agriculture solutions beyond pilots into widespread use..

[Audio] Commercial banks remain the most important private funding source in European agriculture. Their role is primarily to finance capital investments and operational needs for farms and agri-food businesses. What we see on this slide reflects how banks actually operate in practice. They finance machinery, irrigation systems, storage, energy infrastructure, and increasingly digital tools when these are bundled with physical assets. However, bank lending is inherently conservative. Decisions are based on creditworthiness, collateral, stable cash flows, and repayment capacity — not on innovation potential or technological novelty. This is why stand-alone digital tools, software platforms, or early-stage technologies often struggle to access bank finance. To reduce perceived risk, bank loans are frequently combined with CAP investment support, public guarantees, or co-financing schemes. Commercial banks are essential for scaling adoption at farm level, once solutions are proven and reliable..

[Audio] Leasing and machinery financing represent one of the most common entry points for digital technologies into agriculture. Rather than purchasing equipment outright, farmers and agri-food businesses gain access to machinery and embedded technologies through structured leasing or asset-based financing schemes. In Digital Agriculture, this mechanism is particularly important because many digital tools enter farms through hardware: tractors, harvesters, irrigation systems, and precision equipment increasingly come with integrated sensors, connectivity, and software services. However, this financing model is strongly asset-driven. The investment decision is tied to a specific piece of equipment, not to the digital innovation itself. As a result, software-only solutions, open platforms, or independent digital services are rarely financed unless they are bundled into machinery contracts. Leasing therefore accelerates adoption when digital tools align with machinery renewal cycles. At the same time, it can limit flexibility, create dependency on specific vendors, and slow the diffusion of modular or interoperable digital solutions. In practice, leasing supports technology uptake through replacement, not experimentation or independent innovation.".

[Audio] Venture capital plays a very different role in the Digital Agriculture funding ecosystem. VC is not designed to support widespread farm-level adoption, but to scale companies that develop digital technologies with high growth potential. In this context, venture capital targets agri-tech start-ups that offer scalable platforms, data-driven services, automation, robotics, or AI-based decision-support systems. Investors typically take equity stakes and provide strategic guidance, expecting strong growth and clear exit opportunities. This model works well for technologies that can be standardised and replicated across regions and markets. However, it is less suited to locally adapted solutions, incremental improvements, or technologies that require long adoption cycles and close user support. From a system perspective, venture capital accelerates the growth of digital agriculture suppliers, not the adoption of digital agriculture by the majority of farms. Its contribution is strongest when combined with public instruments that de-risk early development and with advisory systems that support user uptake.".

[Audio] Private equity enters the Digital Agriculture landscape at a later stage than venture capital. PE investors typically target established companies with proven business models, stable revenues, and clear opportunities for operational optimisation or consolidation. In agriculture, this often includes mature agri-tech firms, service providers, food processors, or large farming operations undergoing digital transformation. The focus is not on experimentation, but on scaling efficiency, professionalisation, and long-term value creation. Private equity can play a powerful role in modernising agri-food systems by integrating digital tools into existing operations, improving management practices, and strengthening market positions. At the same time, PE has limited appetite for technological uncertainty and rarely supports high-risk or early-stage innovation. As a result, private equity contributes to structural transformation and consolidation, rather than to the emergence of new digital solutions.".

[Audio] Corporate investment and strategic partnerships occupy a hybrid position between public funding and purely financial investment. Here, large agri-food companies, machinery manufacturers, input suppliers, or retailers invest in digital solutions to serve strategic objectives rather than purely financial returns. These partnerships often take the form of pilot projects, co-development agreements, or internal deployment of digital tools within specific value chains. They can be highly effective in accelerating adoption where there is strong alignment between the technology and corporate needs. However, corporate funding is usually selective and context-specific. Scaling beyond a particular value chain or business model is not guaranteed, and long decision-making processes can slow down innovation cycles. Corporate investment therefore enables targeted adoption and integration, but its systemic impact depends on openness, interoperability, and alignment with broader market demand.

[Audio] Cooperative and collective financing reflects a distinct logic within the private funding ecosystem. Here, investment decisions are driven by shared needs and mutual benefit among farmers, rather than by profit maximisation or rapid growth. In Digital Agriculture, cooperatives often invest in shared platforms, collective data systems, advisory services, traceability tools, or pooled infrastructure. This approach can significantly lower individual risk and improve access to digital tools for smaller farms. At the same time, cooperative financing is typically limited in scale. Decision-making is consensus-based, risk appetite is low, and expansion beyond local or regional contexts is rare. From a policy perspective, cooperatives are powerful enablers of inclusive adoption. They help ensure that digitalisation does not benefit only large or capital-intensive farms, but they require strong governance, trust, and long-term engagement to succeed.".

[Audio] We now move to a category of private capital that sits between traditional finance and public policy objectives: impact investors and ESG-focused funds." Impact investors and ESG funds provide private capital to organisations that aim to deliver measurable environmental or social outcomes alongside financial returns. Unlike conventional investors, their decisions are not based solely on profit expectations, but also on alignment with sustainability objectives such as climate action, resource efficiency, and social inclusion. In the context of Digital Agriculture, this type of capital is increasingly relevant because digital technologies play a critical role in enabling climate-smart farming, emissions reduction, biodiversity protection, and transparency across food systems. For impact-oriented investors, digital tools are not an end in themselves, but a means to demonstrate and scale positive outcomes. Typically, impact and ESG funds finance solutions such as climate-smart and resource-efficient farming technologies, digital platforms that support environmental monitoring and sustainability reporting, and traceability systems that improve transparency in agri-food supply chains. They are also active in scaling agri-tech companies whose business models are explicitly linked to environmental performance, social value, or resilience of food systems. However, this form of capital comes with specific constraints. Impact must be measurable, verifiable, and reportable, often aligned with recognised ESG frameworks or regulatory requirements. Financial viability remains essential — impact funds still expect returns, even if they are sometimes patient or blended with public support. As a result, early-stage experimentation or unproven technologies may struggle to attract this type of funding without prior validation..

[Audio] This diagram illustrates how the funding ecosystem for Digital Agriculture works in practice. At the centre, we see three core pillars that interact continuously rather than sequentially. The first pillar is public research and innovation funding. This is where new ideas are explored, technologies are developed, and pilots and prototypes are tested. EU and national R&I programmes play a critical role here, but their main output is innovation potential, not large-scale adoption. The second pillar consists of policy and regional systems. This layer translates innovation into practice through incentives, skills development, advisory services, and regional support structures. Instruments such as CAP measures, AKIS, and regional programmes operate here. In reality, this is the most complex and sensitive part of the system, because adoption depends on farmer capacity, trust, and local conditions. The third pillar is private capital. This includes banks, investors, and corporate actors that finance solutions once they are sufficiently mature and de-risked. Private capital does not fund experimentation; it supports replication and scaling where there is a clear market case. Around these pillars, the circular arrows show how the system is shaped by broader forces. Policy priorities, such as the Green Deal, the CAP, and the EU Digital Strategy, push innovation in certain directions. Market signals and supply chains pull only a subset of solutions into scale. Feedback from real-world use highlights barriers, failures, and costs, leading over time to a reorientation of policies and funding priorities. Overall, the key message is that Digital Agriculture does not advance through a single funding programme, but through the interaction of public innovation funding, policy systems, and private investment — with feedback and adjustment at every stage.".

[Audio] Despite substantial public investment in agriculture, traditional funding mechanisms often struggle to support the scale and pace of transition required for Digital Agriculture. The Common Agricultural Policy, for example, plays a critical role in income stability and environmental support. However, much of its environmental spending focuses on maintaining existing practices, rather than enabling deeper structural transformation through digitalisation. At the operational level, administrative complexity, slow decision-making, and delayed payments create significant barriers — especially for innovators, SMEs, and farmers who operate with limited cash-flow flexibility. At the same time, banks and investors often perceive agriculture as a high-risk sector, which restricts access to private finance for digital solutions that are not yet fully proven. Finally, funding instruments remain fragmented across EU, national, and regional levels, with limited coordination between research funding, incentives, and investment tools. As a result, many promising digital solutions struggle to move beyond the pilot phase into widespread adoption..

[Audio] Up to now, we have looked at public and private funding mechanisms mostly as separate worlds. Here, we bring them together. On the left side, we see how public funding traditionally operates. Public instruments — such as EU and national R&I programmes, CAP measures, and regional funds — are essential because they create innovation and adoption capacity. They finance research, pilots, skills, advisory services, and early uptake. Without them, many digital solutions in agriculture would never exist. However, public funding alone rarely delivers sustainable scale. Gaps remain between pilots, adoption, and long-term deployment. On the right side, we see the role of emerging finance models. Digital Agriculture increasingly requires long-term investment, not just short project cycles. Risk is therefore gradually shared between public and private actors, and sustainability and impact considerations are becoming part of investment decisions. The key message of this slide is that we are moving away from a linear logic — where public funding ends and private funding begins — towards blended and complementary models. These models aim to connect innovation, adoption, and scale more effectively.".

[Audio] Improving access to finance for Digital Agriculture requires both new financial instruments and stronger enabling ecosystems. On the financial side, diversification is essential. Instruments such as crowd-lending platforms, crowdfunding, and mini-bonds can help mobilise private capital while spreading risk more broadly across actors. At the same time, risk-sharing and blended finance mechanisms can reduce barriers for banks and investors, particularly for digital and data-driven innovations that do not fit traditional lending models. However, finance alone is not enough. Enabling ecosystems play a crucial role. Digital Innovation Hubs can provide technical support, matchmaking, and capacity building. Field labs and real-world testing environments help validate solutions, reduce uncertainty, and build trust among farmers, advisors, and investors. Together, these approaches help close the persistent gap between innovation, adoption, and sustainable scale in Digital Agriculture.".

thank you!. TALLHEDA has received funding from the European Union's Horizon Europe research and innovation programme under Grant Agreement No. 101136578. Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Research Executive Agency (REA). Neither the European Union nor the granting authority can be held responsible for them..