Estonian biotechnology startup ÄIO has raised €6.1M in a funding round led by Voima Ventures, 2C Ventures, SmartCap, and Nordic Foodtech VC. The investment will fund the construction of a demonstration plant in Estonia, enabling the company 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 has developed a novel fermentation process that transforms industrial by-products into food-grade fats and oils. It aims to provide a sustainable alternative to palm oil and animal fats, reducing a critical environmental concern in the food industry.
The company’s technology uses specialised yeast to convert sugars extracted from sawdust and other agricultural waste into oils. According to co-founder Nemailla Bonturi, their production method can decrease land use by up to 97% and water consumption by a factor of ten compared to conventional palm oil and animal fat production.
ÄIO’s product line-up includes three categories: encapsulated oil, red oil, and butter fats. These alternatives are designed to replace widely used palm oil in food products, with the red oil variant also finding applications in cosmetics and household goods.
The investment round follows a €1M seed funding secured last year, which enabled the initial development of these product categories. In addition to securing investments, ÄIO also received a €1.8M grant from the Enterprise Estonia last year to create a platform necessary for developing semi-automated strain technology, in collaboration with the Center of Food and Fermentation Technologies (TFTAK).
The fresh capital will primarily finance the construction of a demonstration plant, expected to be operational by 2026. This facility will produce tens of tons of ÄIO’s alternative oils, bringing the company closer to commercial-scale production.
“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,” says Hendrik Reimand, partner at the venture capital fund 2C Ventures.
The company has established partnerships with over 120 partners, including major food, cosmetics, and household product manufacturers, for both sourcing industrial residues and product testing. It also contributes to an even bigger value chain, actively participating in creating a roadmap for future Estonian novel food companies.
“For a scientist, the greatest achievement is when years of research result in a real product that can change the entire food industry and consumer experience. We will continue to develop the company and its products in collaboration with partners, investors and the food industry. We will also continue working with TalTech to train the next generation of bioengineers,” says Bonturi.
This is just one example of how Estonia is putting itself on the world map as a food tech hub. Read more and get in touch to talk about how you can be a part of the future of food.
