ÄIO, an Estonian biotechnology company developing sustainable, non-animal fats and non-vegetable oils through innovative fermentation processes, has secured €1M in funding to accelerate development of safer and more ecological alternatives to traditional oils used in cosmetics and chemical industry applications.
The company’s mission is to replace unsustainable and unethical oils in cosmetics formulations with its lipid-rich yeast-derived alternative, which is vegan and promotes clean beauty.
“This grant represents more than funding, it’s validation from the Estonian government that our technology can fundamentally reshape how cosmetics ingredients are produced.”
Nemailla Bonturi, Co-founder and CEO at ÄIO
The €1M funding comes in the form of a grant from the Estonian government-backed Applied Research Programme (RUP), organized by Enterprise Estonia (EIS). The grant will support a three-year research and development project focused on microbial fermentation-derived lipids and their derivatives, specifically for use in cosmetic and personal care ingredients. The total budget for the project is projected to be €1.8M.
“Beauty brands of all sizes now realize that sustainability isn’t just a nice-to-have, it’s an essential requirement driven by increasing customer demand,” says Magdalena Koziol, Head of Cosmetics Development at ÄIO. Photo: ÄIO
Validation from the government
“This grant represents more than funding, it’s validation from the Estonian government that our technology can fundamentally reshape how cosmetics ingredients are produced,” says Nemailla Bonturi, Co-founder and CEO at ÄIO.
“We’re now ready to show we can scale that impact on the international stage, bringing smarter, more sustainable ingredient alternatives to an industry that touches the everyday lives of all of us. We’re excited to start commercializing our innovation and to collaborate with forward-thinking beauty and personal care brands around the world.”
Last fall ÄIO raised €6.1 million through venture capital funds Voima Ventures, 2C Ventures, SmartCap and Nordic Foodtech VC. The funds will be used to build a demo plant in Estonia to produce environmentally friendly oils and fats from wood and agricultural residues.
Founded in 2022 as a spin-off from Tallinn University of Technology (TalTech), ÄIO uses biomass and precision fermentation to transform industrial side streams into nutrient-rich oils and fats. The process requires 97% less land and 90% less water than conventional palm oil production, according to company data.
For the cosmetics sector, ÄIO’s solutions offer an eco-conscious, high-performing, and cost-effective alternative to palm and coconut oil, commonly used in a wide variety of personal care products. Its nourishing properties and additional bioactive benefits make it a natural alternative to petroleum-derived mineral oils, which can be harmful to the skin and cause environmental pollution.
Estonian innovations with global potential
“We actively support the development of Estonian innovations that have clear potential to become globally competitive products with high added value and impact on pressing worldwide challenges. Biotechnology and sustainable biomaterials are among our strategic priorities,” says Ene Viiard, R&D Expert at the EIS Applied Research Programme (RUP).
“Competition for RUP support is high, but in ÄIO, we see an exceptional team with the scientific knowledge and disruptive attitude that proves that even from a small country like Estonia, it is possible to produce and scale world-changing innovations.”
“We actively support the development of Estonian innovations that have clear potential to become globally competitive products with high added value and impact on pressing worldwide challenges.”
Ene Viiard, R&D Expert at the EIS Applied Research Programme (RUP)
The grant’s timing aligns perfectly with major regulatory shifts, particularly the EU’s deforestation regulation that will significantly impact palm oil sourcing and create even more urgent demand for traceable, sustainable alternatives. ÄIO’s yeast-based alternatives offer a direct solution to this challenge, providing superior traceability and consistent quality compared to agricultural ingredients that are subject to climate and political volatility.
ÄIO is now in talks with cosmetics producers to use its ingredients in various product formulations. Moreover, the startup is sending samples to manufacturers as it embarks on its next phase of commercial development. Photo: ÄIO
ÄIO´s oils will change the cosmetics industry
“The cosmetics industry is at a turning point. Beauty brands of all sizes now realize that sustainability isn’t just a nice-to-have, it’s an essential requirement driven by increasing customer demand,” says Magdalena Koziol, Head of Cosmetics Development at ÄIO.
“Until recently, sustainable solutions have been held back by performance or price-related concerns compared to ingredients like palm or coconut oil. Through research, development, and scientific validation, we’re showing that fermentation-derived ingredients have huge commercial potential for a future where both everyday and luxury beauty products don’t come at the cost of our environment or human health.”
ÄIO’s ingredients serve diverse cosmetics applications, from everyday soap to high-performance face moisturizers and serums, and makeup formulations with specialized pigments.
ÄIO is currently in active discussions with cosmetics manufacturers interested in utilizing its ingredients in various product formulations. It has also begun sending samples to cosmetic producers as it prepares for the next phase of commercial development. ÄIO plans to fundraise by the end of Q3 2026 to support its expansion plans. The alternative fat market is expected to grow by 6% annually to reach $4.5 billion by 2032.
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