The biotechnology startup ÄIO has 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, offering an alternative to the widely used oils in the food industry. 

Founded in 2022 as a spin-off from TalTech (Tallinn University of Technology), ÄIO has developed a unique method that enables the food industry to reduce its reliance on environmentally harmful animal fats, palm oil and other vegetable oils. The company’s solution uses specialised yeast to transform by-products from wood and agricultural processes, such as sugars extracted from sawdust, into food-grade fats and oils. This process is significantly faster and much less taxing on the environment.

Last year, ÄIO raised €1 million through venture capital, allowing the development of three alternative product categories: encapsulated oil, red oil and butter fats. These products can replace widely used palm oil in the food industry, and ÄIO’s branded Red Oil can also be used in cosmetics and household products.

ÄIO´s oils production reduces land use and water consumption

According to Nemailla Bonturi, co-founder of ÄIO, oils made from residues significantly reduce the environmental impact of agriculture and animal farming. “ÄIO’s oils, produced from industrial residues, help reduce land use by up to 97% and water consumption by as much as 10 times compared to current palm oil and animal fat production. Additionally, the speed of oil and fat production through fermentation is 10 times faster,” said Bonturi.

“ÄIO’s oils, produced from industrial residues, help reduce land use by up to 97% and water consumption by as much as 10 times compared to current palm oil and animal fat production.”
Nemailla Bonturi, co-founder of ÄIO

Investors see great future potential in the company for two main reasons. Firstly, ÄIO addresses one of the biggest environmental challenges of our time related to oil production, and secondly, it fosters economic growth.

Nordic Foodtech VC was one of the first investors to believe in the startup two years ago, when the company emerged from the TalTech lab, and encouraged others to join. “ÄIO’s food industry testing has been successful, and feedback on the initial products has been encouraging. We are confident that with this funding, we will reach the next phase, and we welcome our new co-investors with joy,” said company partner Mika Kukkurainen.

Sustainable alternative for the food and cosmetic industry

Hendrik Reimand, partner at the venture capital fund 2C Ventures, believes that ÄIO can turn its scientific advancements into commercial success. “Providing sustainable alternatives to products such as palm oil or animal fats is a critically important step in reducing the environmental impact of the food and cosmetics industry and we are confident in the teams’ ability to turn this scientific development into commercial success.”

“Providing sustainable alternatives to products such as palm oil or animal fats is a critically important step in reducing the environmental impact of the food and cosmetics industry.”
Hendrik Reimand, partner at the venture capital fund 2C Ventures

Voima Ventures partner Pontus Stråhlman emphasizes that the biotech startup provides a solution to the palm oil industry problem, which destroys diverse forests, such as those in Indonesia. “ÄIO’s approach addresses this issue by valorizing agricultural and forestry sidestreams into premium replacements, meaning significant reductions in CO2 or land use.”

The funds will be used to build a demo plant in Estonia. The factory is expected to be finished by 2026 and will produce tens of tons of encapsulated oil, red oil, and butter fat. The startup collaborates with various Estonian and Finnish food industry companies to procure raw materials, using their by-products to manufacture oils. Additionally, ÄIO is working with the Estonian company Fibenol to convert wood hydrolysates.

Today, ÄIO has over 120 partners from Estonia and abroad who supply industrial waste or test its oils and fats, the company announced.

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