The biotechnology startup ÄIO has successfully raised €6.1 million through a combination of venture capital funds. Backed by Voima Ventures, 2C Ventures, SmartCap, and Nordic Foodtech VC, the investment will be used to establish a demo plant in Estonia. This facility will produce eco-friendly oils and fats derived from wood and agricultural residues, providing an alternative to the harmful oils traditionally used in the food industry.

Pioneering a Sustainable Alternative to Traditional Oils

ÄIO, founded in 2022 as a spin-off from Tallinn University of Technology (TalTech), has developed a unique technology aimed at transforming by-products from wood and agricultural processes into food-grade fats and oils. This innovative solution utilizes specialized yeast to convert materials like sugars extracted from sawdust into oils, presenting a more environmentally friendly alternative to palm oil and animal fats. The process is not only faster but significantly reduces environmental strain, addressing the food industry’s reliance on resource-heavy oil production methods.

According to ÄIO’s co-founder, Nemailla Bonturi, the company's oil production methods can drastically cut down land use by up to 97% and water consumption by as much as ten times compared to traditional palm oil or animal fat production. Furthermore, the fermentation-based production is up to ten times faster than current methods.

Breakthrough Innovations in Sustainable Oils

Last year, ÄIO secured €1 million in venture capital funding, enabling the development of three new product lines: encapsulated oil, red oil, and butter fats. These products are designed to replace conventional palm oil in the food industry, with ÄIO's branded Red Oil offering potential applications in cosmetics and household goods.

This recent funding will be used to scale production, focusing on constructing a demo plant capable of producing tens of tons of these innovative products. The plant is expected to be operational by 2026 and will likely be located near a large industrial partner. Collaboration with Estonian and Finnish food industry companies will provide the raw materials needed for production, with ÄIO leveraging by-products from these companies to create its oils.

Investment in a Sustainable Future

Investors see significant potential in ÄIO’s business model. Mika Kukkurainen, partner at Nordic Foodtech VC, highlighted the success of the company’s food industry testing and expressed confidence in ÄIO’s ability to scale its production with this new round of funding. Other investors, such as 2C Ventures and Voima Ventures, emphasized the importance of ÄIO’s work in addressing the environmental challenges associated with palm oil production, particularly in regions like Indonesia, where deforestation is rampant.

For SmartCap’s Green Fund, investing in ÄIO represents an opportunity to support cutting-edge technologies that align with the European Union's NextGenerationEU initiative. Sille Pettai, Fund Manager at SmartCap, stressed that backing ÄIO not only promotes waste reduction but also helps various industries reduce their dependence on traditional raw materials.

Industrial Interest and Global Collaboration

ÄIO has already attracted significant interest from major industrial players in the food, cosmetics, and household products sectors. With over 120 partners, including companies from both Estonia and abroad, ÄIO is well-positioned to lead the charge in developing new products and reducing reliance on conventional oils. Partnerships with companies like Fibenol, whose hydrolysates will be used in ÄIO’s production process, underline the collaborative nature of their work.

This year has been particularly eventful for ÄIO. The company was selected to participate in the European Joint Undertaking on Circular Bioeconomy (CBE-JU) project, which has a budget of €7.5 million. As part of this initiative, ÄIO will work alongside other European companies and research institutions to develop fat-based materials and cosmetics. Earlier this year, the company also opened a separate innovation center called “Good Fat Wörks,” dedicated to advancing the development of alternative fats.

A Promising Future for Sustainable Oil Production

Founded by TalTech bioengineers Petri-Jaan Lahtvee and Nemailla Bonturi, ÄIO has grown into a team of 16 experts hailing from Estonia, Brazil, Poland, Armenia, and Italy. The company’s technology, based on research conducted in Estonia, uses a fermentation process similar to brewing beer or raising bread with yeast. The result is healthy, sustainable oils and fats rich in fatty acids and antioxidants, made using the “red yeast” microbe created and patented by Bonturi.

In addition to its recent investments, ÄIO received a €1.8 million grant from the Estonian Business and Innovation Agency (EISA) last year. This grant, awarded to help the company develop semi-automated strain technology, is part of a collaboration with the Center of Food and Fermentation Technologies (TFTAK).

ÄIO’s innovative approach to producing sustainable oils from industrial by-products marks a significant step forward in reducing the environmental impact of the food, cosmetics, and household products industries. With the backing of major venture capital funds and growing interest from industrial partners, the company is poised to scale its production and make a lasting impact on global oil production. Through ongoing collaboration with research institutions and industry players, ÄIO is not only developing groundbreaking technologies but also fostering a more sustainable future for the food industry.