As sustainability becomes a top priority across industries, the beauty and chemical sectors are under increasing pressure to shift away from ingredients that harm the planet and human health. With palm oil, mineral oils, and animal-based fats under scrutiny for both regulatory and ethical reasons, demand is increasing for cleaner, greener alternatives. That’s where ÄIO steps in.
The Estonian biotech company, founded in 2022 as a spin-off from the Tallinn University of Technology, is developing sustainable fats and oils using an innovative fermentation method that converts industrial by-products, such as sawdust, into high-value ingredients. ÄIO leverages a patented process to convert side streams, such as sawdust, agricultural residues, and even lignocellulosic waste, into lipids through precision fermentation with engineered microbial strains. Now, ÄIO has secured €1 million in funding to accelerate its research and development of these next-generation cosmetic ingredients.
The funding came in the form of a grant from the Estonian government-backed Applied Research Programme (RUP), organised by the Estonian Business and Innovation Agency (EIS). The funding 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 €1.8 million.
The project will focus on scaling up fermentation processes, optimising downstream purification for cosmetic standards, and carrying out comprehensive safety, efficacy, and skin compatibility testing for regulatory approval in EU and global markets.
According to ÄIO, “To date, the company has raised €7.1 million, including a €1 million pre-seed funding in 2022 and €6.1 million seed funding in 2024. The plan is to have Seed A investment round in Q4 2026. In addition €1.7 million in grants previously, and now this grant is €1 million, so the total is €2.7 million in grants in addition to investments.” The company’s funding also supports its growing IP portfolio, with several patents filed covering both the core fermentation process and specific fatty acid profiles tailored for cosmetic and food applications.
Plans to scale up
Currently, ÄIO is actively engaged with cosmetics manufacturers to test its ingredients and is already shipping out product samples. This marks a crucial step toward commercial readiness, and the company anticipates entering its next fundraising round by the end of Q3 2026 to support its scale-up. In the coming years, the company aims to establish its full-scale factory, engage in joint ventures, and secure licensing patents.
ÄIO is also developing a licensing model for international expansion, allowing manufacturers in other regions to produce ingredients locally using ÄIO’s technology and know-how. The go-to-market strategy targets both direct supply to brands and bulk sale to formulation partners and large ingredient suppliers. A pilot production plant is already operational, supporting prototype orders and regulatory sample batches.
What specific market problem does ÄIO address?
Whether it’s palm oil in moisturisers or mineral oils in makeup removers, many widely used cosmetic ingredients are increasingly seen as outdated. Their environmental toll, from deforestation to microplastic pollution, has triggered consumer backlash and tightened regulations, especially in Europe.
The company addresses the environmental impact of using animal fats, palm oil, and other vegetable oils in the food and cosmetics industries, which contribute to deforestation, excessive land use and water consumption. Additionally, palm oil production is frequently associated with biodiversity loss and greenhouse gas emissions, whereas mineral oils are derived from petroleum and are non-renewable. Consumers and brands are actively seeking replacements that do not compromise on product quality.
Founders bringing science and sustainability together
The founders Nemailla Bonturi and Petri-Jaan Lahtvee are bioengineers from Tallinn University of Technology (TalTech) with significant expertise in biotechnology and synthetic biology, demonstrating the necessary expertise to develop and commercialise this technology.
Nemailla Bonturi is co-founder and CEO of ÄIO. Carried out her PhD in the School of Chemical Engineering, University of Campinas, Brazil, on the production of microbial oil in oleaginous yeasts using hemicellulosic hydrolysates as a carbon source. Has worked as a research scientist in Luleå University of Technology, Tartu University and TalTech until becoming a female founder.
Petri-Jaan Lahtvee is a tenured professor at TalTech and the co-founder and COO of ÄIO. He earned his PhD from TalTech in 2012, completed a postdoctoral fellowship at Chalmers University of Technology in Sweden, and later established his first research group at the University of Tartu. His research group has pioneered the Design-Build-Test-Learn cycle for constructing microbial cell factories, employing a wide range of techniques, including bioinformatics, synthetic biology, bioprocess optimisation, and additive manufacturing of living materials.
As revealed to TFN, “While not a personal problem, it emerged from the scientific goal of finding sustainable alternatives to environmentally damaging oils and fats. The founders have strong academic and research backgrounds, which led them to develop this innovative technology, embarking on a journey from academia to entrepreneurship.”
Talking about diversity, the company said: “As of Q2 2025, ÄIO employed 22 team members and 2 interns, with plans to expand by hiring 4 additional employees. The team is composed of 45% women and 55% men, with strong academic credentials, as 23% hold PhDs and 55% Master’s degrees. ÄIO boasts a highly international team, with members hailing from Estonia, Brazil, Italy, India, Poland, Armenia, Iran, and Canada. Spread across five departments, the team brings together deep scientific expertise, business and finance acumen, and even top-chef experience, reflecting the company’s end-to-end focus from technology development to product application.”
Rethinks oils in beauty products
ÄIO’s technology transforms by-products from the wood and agricultural industries into food-grade oils and fats using a specialised fermentation process. This process is faster and much less harmful to the environment, significantly reducing land and water usage. ÄIO’s technology is 10 times faster and uses 10 times less water and 97% less land.
The proprietary fermentation platform employs both non-GMO and GMO strains, optimised for the conversion of select substrates to oils rich in desired fatty acids (e.g., stearic, oleic, linoleic), tailored for cosmetic efficacy. This platform can be expanded to produce speciality lipids and functional bioactives in future product lines.
The growing global demand for sustainable and environmentally friendly products, along with increasing awareness of the environmental damage caused by palm oil and animal fat production, makes ÄIO’s solutions highly relevant. It has developed three alternative product categories and has over 120 collaboration partners from various industries worldwide. The result is a high-performing, vegan alternative that meets modern cosmetic needs while reducing the industry’s dependence on ecologically harmful resources.
ÄIO’s oils and fats can be used in a wide variety of cosmetic products from daily-use soaps to advanced facial serums and colour cosmetics. The ingredients not only mimic the texture and performance of traditional oils but also offer added benefits such as skin nourishment and antioxidant properties.
Their versatility makes them attractive to the full spectrum of beauty brands, from legacy multinationals seeking sustainable sourcing to nimble indie labels focused on innovation and ingredient transparency. As demand for ethical beauty grows, ÄIO is well-positioned to support next-gen product formulations across the board.
What sets it apart from other solutions in the market?
ÄIO has about twenty to thirty competitors around the world that operate in single-cell oil production, where ÄIO’s main competitive advantage is the wide range of local substrates that can be utilised, making its ingredients cheaper and appealing to the food and cosmetics industry. The company added: “With these competitors, we actually compete with palm oil, coconut oil, and animal fat producers. C16 and NoPalm are the main competitors.”
ÄIO’s key differentiator is its ability to utilise a wide range of local substrates, which lowers production costs and enhances the appeal of its ingredients to the food and cosmetics industries. Its technology transforms by-products from wood and agriculture into eco-friendly oils and fats, offering a sustainable alternative to traditional animal fats and palm oils used in the food, cosmetics, and household industries.
Users, primarily in the food, cosmetics, and household products industries, can replace traditional oils with ÄIO’s sustainable alternatives. These products are easy to integrate into existing production processes and offer similar or superior performance compared to conventional oils.
“This grant represents more than funding, it’s validation from the Estonian government that our technology can fundamentally reshape how cosmetics ingredients are produced,” said 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 commercialising our innovation and to collaborate with forward-thinking beauty and personal care brands around the world.”
“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,” added 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.”
“The cosmetics industry is at a turning point. Beauty brands of all sizes now realise that sustainability isn’t just a nice-to-have, it’s an essential requirement driven by increasing customer demand,” added 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.
“We’re seeing unprecedented interest from manufacturers that realise sustainable sourcing is no longer optional. Koziol continued. “We’re ready to continue scaling up our efforts and are actively seeking partners to join our mission to create real change in the industry. The question isn’t whether the industry will transition to alternative ingredients, but how quickly, and the time to start is now.”
