Unlocking Innovation: The Untapped Potential of Philanthropic Capital in Europe

Unlocking Innovation: The Untapped Potential of Philanthropic Capital in Europe.

The UK lacks a reliable way to fund the space between discovery and commercial readiness. It does not have a shortage of world-class science in bio, food and agri-tech.

This “missing middle” — where technical risk is high, timelines are long, and outcomes uncertain — is where many promising ventures stall. Venture capital typically arrives too late. Public grants rarely run far enough. As a result, innovations with genuine societal and economic value fail to cross the translational threshold. In the United States, venture philanthropy has emerged as a pragmatic response. In Europe, and particularly the UK, it remains under-developed.

What Europe Can Learn from Denmark

The BioInnovation Institute (BII) in Denmark offers a compelling alternative model. Backed by the Novo Nordisk Foundation, BII does not rely on conventional grants. Instead, it deploys convertible loan capital into early-stage companies.

This is a subtle but important distinction.

Convertible structures provide founders with early runway while preserving alignment between mission, impact and future equity outcomes. Capital can be recycled rather than exhausted. Crucially, this approach recognises that translational science is not well served by either grant logic or venture capital logic alone.

It is patient, thesis-driven capital with intent — not charity, and not VC.

Why This Matters for the UK

UK bio, food and agri-tech ventures are disproportionately exposed to early risk:

• Long development cycles

• Regulatory complexity

• Capital-intensive proof-of-concept work

• Unclear early exit pathways

These characteristics systematically deter commercial investors at precisely the point where support is most needed.

Public funding helps, but it is fragmented and often constrained by rigid scopes and milestones. What is missing is capital designed specifically to absorb early translational risk — capital that exists to make later private investment possible, not to replace it.

Well-structured philanthropic capital does exactly this.

So Why Has the UK Not Adopted It?

The UK is not short of philanthropic resources. Organisations such as Wellcome and Cancer Research UK, alongside private foundations and family offices, command significant capital.

What is missing is not money, but mechanism.

Three gaps stand out:

1. InfrastructureThere are few credible platforms capable of deploying patient capital using investment-grade structures with a clear impact thesis.

2. FramingPhilanthropic capital is still widely perceived as grants or donations, rather than as a legitimate, disciplined funding instrument.

3. ConfidenceFounders and advisors often lack familiarity with how philanthropic and commercial capital can be sequenced rather than opposed.

Until these gaps are addressed, the missing middle will persist.

A Practical Reframe

For founders, philanthropic capital should be viewed as part of a blended funding stack — providing time, evidence, and optionality before venture capital enters the picture.

For foundations and family offices, venture philanthropy offers a way to align purpose with capital discipline, backing outcomes rather than optics.

For policymakers, the opportunity is to enable these structures — through regulatory clarity, tax treatment, and public-private co-investment — rather than defaulting to ever more fragmented grant schemes.

The Strategic Opportunity

Venture philanthropy is not a substitute for venture capital. It is the missing precursor.

If the UK is serious about translating scientific excellence into globally competitive companies — in food systems, health, and sustainability — then patient, thesis-driven capital must move from the margins to the mainstream.

The question is no longer whether the model works. Denmark has already answered that.

The real question is whether the UK is prepared to build the infrastructure to use it.

Editorial note

This article was first published on Substack and has been adapted and expanded for this blog.

Optional reading!

The excellent Thesis-Driven Funds article in SSIR makes the case for problem-first, patient capital that aligns purpose and profit. It’s a powerful reference point for what we might build — not just in the UK, but across Europe.

Read this too https://www.researchbridgepartners.org/now-more-than-ever-venture-philanthropy-is-critical-to-biotech-innovation/