Estonian biotech start-up 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 traditional oils in the food industry.
Founded in 2022 as a spin-off from Tallinn University of Technology (TalTech), Äio has developed a unique process that enables the food industry to reduce its reliance on harmful animal fats, palm oil and other vegetable oils. Using specialised yeasts, Äio converts agricultural by-products such as sugar from wood and sawdust into food-grade fats and oils.
In 2023, Äio raised €1 million in venture capital to enable the development of three alternative product categories: encapsulated oil, red oil and butterfat, which are alternatives to palm oil in various applications. Äio’s branded red oil is also suitable for use in cosmetics and household products.
Aio’s oil, produced from industrial waste, “can help reduce land use by up to 97 percent and water consumption by up to 10 times compared to current palm oil and animal fat production,” company co-founder and Taltech researcher Nemaila Bonturi said in a statement. “In addition, the speed of oil production through fermentation is 10 times faster,” she said.
Chocolate and muffins made from encapsulated oils. Photo by Andres Raudjalg/Äio.
The production process, based on Estonian research, transforms industrial by-products into food through a fermentation process similar to beer brewing, resulting in fats rich in healthy fatty acids and antioxidants, using a patented “red yeast” microorganism developed by Bonturi.
“For a scientist, it is the greatest achievement when the culmination of years of research produces a product that changes the entire food industry. We will continue to develop the company and its products together with our partners, investors and the food industry,” Bonturi said.
Cookies made from sawdust. Photo by Andres Raudjalg/Äio.
The startup has raised €6.1 million in venture capital from Voima Ventures, 2C Ventures, SmartCap and Nordic Foodtech VC. Äio has the potential to commercialize scientific advances, according to Hendrik Reimand of 2C Ventures, and highlights the importance of sustainable alternatives. “Offering sustainable alternatives to products such as palm oil and animal fats is an important step towards reducing our environmental impact,” he said in a statement.
Pontus Strollman, partner at Voima Ventures, added: “Äio’s approach addresses the palm oil industry’s destruction of diverse forests by transforming agricultural and forestry by-products into a high-quality alternative, significantly reducing CO2 emissions and land use.”
With the new investment, Äio plans to build a demonstration plant to produce encapsulated oil, red oil and butterfat by 2026. The final location has yet to be decided, but it is likely to be built near large industrial companies that will source raw materials through cooperation with Estonian and Finnish food industry companies.
To date, the biotech startup has secured over 120 partners across the world to develop innovative products using its oils and fats.
Äio’s founders are Nemailla Bonturi and Petri-Jaan Lahtvee. Photo: Andrey Ozdoba
Äio has also been selected for the European Circular Bioeconomy Joint Undertaking project, with 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 currently consists of 16 members with diverse backgrounds in bioprocessing, synthetic biology and food technology.
