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From millions to billions: financing the next phase of the bioeconomy

November 14, 2026

From community-led enterprises in the Amazon to larger bio-based industries in Europe, promising businesses face barriers that conventional financing often fails to address. The Bioeconomy Challenge is examining what it takes to turn that potential into investable opportunities.

A small bioeconomy enterprise may have a promising product, access to biological resources and customers interested in buying it. On paper, it has everything it needs to grow. What it often lacks is the finance to do so.

The business may lack the collateral required by a commercial bank, struggle to demonstrate predictable revenues or face high costs to reach larger markets. For a lender, financing a relatively small operation can demand considerable time and resources, even when the amount involved is modest.

Multiply those challenges across thousands of enterprises and the scale of the financing problem becomes clearer. The bioeconomy offers opportunities for economic diversification, new industries and local livelihoods, but its potential does not automatically translate into projects that banks and investors are ready to finance.

For Luiz Gabriel Todt de Azevedo of the Inter-American Development Bank Group (IDB Group), unlocking investment requires addressing several barriers at once.

“Moving from millions to billions means addressing these barriers together,” he explains. “We need strong investment pipelines, predictable market demand, financing instruments adapted to different stages of business development, and mechanisms that reduce risks for investors.”

These are among the issues being addressed by the Finance Working Group, led by the IDB Group through its Amazonia Forever programme.

Why conventional financing models fall short

An early-stage biotechnology company, a community-led forest enterprise and an established agricultural producer may all operate within the bioeconomy, but they face very different financing challenges.

“One important lesson we’ve learned is that no single financing instrument works for the entire bioeconomy. There’s no silver bullet,” says Azevedo.

Early-stage businesses may require patient capital and technical support. More established enterprises may need credit to expand production. Community-led initiatives may struggle to meet conventional lending requirements. Across these different models, how financial institutions perceive and assess risk can determine whether financing is available at all.

The challenge is therefore not only to mobilise more capital, but to identify financing approaches suited to different businesses and the markets in which they operate.

What a financing solution looks like in practice

One example comes from the IDB Group’s work with Banco do Brasil in the Amazon.The operation combines financing for bioeconomy investments with mechanisms to share risks and strengthen the capacity of local businesses.

It addresses barriers on both sides of the transaction: risk-sharing mechanisms can encourage financial institutions to lend to businesses they might otherwise consider too risky, while technical assistance helps those businesses meet lending requirements.

The IDB Group is also exploring ways to mobilise capital at a much greater scale. Together with the World Bank, it has developed guidelines for Amazon-related Bonds, intended to help attract larger pools of investment into the region.

The Finance Working Group is also looking beyond the IDB Group’s own experience. Its discussions have examined other approaches, including Brazil’s Eco Invest and locally led financing mechanisms for Indigenous Peoples and local communities. They highlight the importance of combining the right financial instruments with technical assistance and stronger institutional capacity.

These examples reflect the diversity of financing needs across the bioeconomy, from attracting institutional investment to reaching enterprises and communities that conventional financial markets often overlook.

Together, they offer a starting point for examining which approaches work, under what conditions and how their lessons might inform investment elsewhere.

As Azevedo puts it, “Financial innovation works best when it responds to real market needs, rather than assuming one solution can be replicated everywhere.“

What works in one market may not work in another

Azevedo cautions that successful financing models often depend on specific local conditions, including market access, institutional capacity and relationships with communities. “A financing model that works in one country or value chain may not be immediately replicable elsewhere.”

A landing instrument developed for an established agricultural value chain, for example, may not suit a network of community-led forest enterprises. Even when businesses have similar activities, differences in regulations, financial institutions or market demand can change what makes an investment viable.

Successful models offer useful lessons, but replicating them requires understanding the conditions that made them effective in the first place. Which risks were reduced? What support did businesses need? How important were local institutions and market conditions?

For Azevedo, this is where the Finance Working Group has its greatest opportunity “bridging the gap between innovative financing solutions and their practical application.”

The ambition is to move beyond individual examples of successful financing and develop evidence that governments, investors and financial institutions can use when designing new investments.

Connecting finance with the wider bioeconomy

Launched at COP30 in November 2025, the Bioeconomy Challenge brings together governments, international organisations, financial institutions, businesses and other stakeholders to translate the G20 High-Level Principles on Bioeconomy into action.

Its Finance Working Group is one of four interconnected workstreams addressing the conditions needed for a sustainable and inclusive bioeconomy. The others address metrics and indicators, market development and trade, and the sociobioeconomy.

These connections have direct implications for investment. A business may secure credit and still struggle if there is insufficient demand for its products. An investor may be interested in a project but lack reliable information about its environmental or social performance. And financing mechanisms designed around conventional business models may overlook community-led enterprises.

“We need to connect finance with the other dimensions of the bioeconomy: credible metrics, competitive markets and inclusive business models,” says Azevedo. “That is what can turn isolated success into broader investment opportunities.”

The next phase: turning lessons into investment

In 2027, the Finance Working Group plans to finalise its Portfolio of Financing Structures and Evidence-Based Instruments to Scale Bioeconomy Investments. It will bring together promising financing approaches, assess their potential for replication and scaling, and identify the conditions needed for successful implementation.

Building on this work, the group will develop an investment roadmap for governments, financial institutions and investors, while exploring opportunities to adapt and test financing approaches through existing initiatives and partnerships.

Mobilising more capital remains essential. But whether that investment delivers will depend on how financing is structured, which businesses it reaches and whether the conditions exist for them to succeed.