Estonian biotech startup Äio has raised €6.1 million in venture capital to build a demonstration plant in Estonia to produce environmentally friendly oils and fats from wood and agricultural residues as an alternative to conventional oils in the food industry.
Founded in 2022 as a spin-off from Tallinn University of Technology – known as TalTech – Äio has developed a unique process that enables the food industry to reduce its dependence on harmful animal fats, palm oil and other vegetable oils. Using special yeast, Äio converts wood and agricultural by-products, such as sugar from sawdust, into food-grade fats and oils.
In 2023, Äio raised €1 million in venture capital, enabling the development of three alternative product categories: encapsulated oil, red oil and butterfats, which can replace palm oil in various applications. Äio’s brand Red Oil is also suitable for cosmetics and household products.
The company’s co-founder, TalTech researcher Nemailla Bonturi, said in a statement that Äio’s oils, produced from industrial residues, “help reduce land use by up to 97% and water consumption by up to 10 times compared to current palm oil and animal fat production”. “In addition, the speed of oil and fat production through fermentation is 10 times faster,” she said.
The production process, based on Estonian research, turns industrial by-products into food through a fermentation process similar to brewing beer. The result is fats rich in healthy fatty acids and antioxidants, using a patented “red yeast” microbe developed by Bonturi.
“For a scientist, the greatest achievement is when years of research result in a product that can change the entire food industry. We will continue to develop the company and its products in collaboration with partners, investors and the food industry,” Bonturi said.
The startup raised €6.1 million in venture capital from Voima Ventures, 2C Ventures, SmartCap and Nordic Foodtech VC. According to 2C Ventures’ Hendrik Reimand, Äio has the potential to commercialise its scientific advances, highlighting the importance of sustainable alternatives. “Providing sustainable alternatives to products such as palm oil or animal fats is a crucial step in reducing environmental impact,” he said in a statement.
Pontus Stråhlman, partner at Voima Ventures, added, “Äio’s approach addresses the problem of the palm oil industry destroying diverse forests by turning agricultural and forestry by-products into high-quality substitutes, leading to significant reductions in CO2 emissions and land use.”
With the new investment, Äio plans to build the demonstration plant, which will produce encapsulated oil, red oil and butterfats by 2026. The final location is yet to be determined, but it is likely to be close to a large industrial company that will source raw materials through cooperation with Estonian and Finnish food industry companies.
To date, the biotech start-up has secured more than 120 partners worldwide to develop innovative products using its oils and fats.
Äio has also been selected for the European Joint Undertaking on Circular Bioeconomy project, which has a budget of €7.5 million, to develop fat-based materials and cosmetic products in collaboration with European partners.
Founded in 2022 by TalTech bioengineers Petri-Jaan Lahtvee and Nemailla Bonturi, Äio’s international team now consists of 16 members with diverse backgrounds in bioprocessing, synthetic biology and food technology.
