ÄIO secures €1M public funding to develop fats and oils for the cosmetics industries!

Press release

Biotechnology company ÄIO secures €1M to develop greener alternatives to unethical and polluting oils in cosmetics products

Tightening legislation and increasing consumer awareness of health, environmental, and ethical concerns associated with ingredients like animal-based fats, palm and coconut oil, and other mineral oils have led to a surge in demand for sustainable alternatives in the cosmetics and chemical industries. ÄIO’s latest funding will support research into the development of new and scaling of its existing fermentation-derived solutions to provide greener and safer alternatives to reduce dependence on fossil-based and other unsustainable oils in personal care formulations.

TALLINN, Estonia (July 22nd, 2025) – 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.

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.

The €1M funding comes in the form of a grant from the Estonian government-backed Applied Research Programme (RUP), organized by the Estonian Business and Innovation Agency (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.

“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.”

“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.”

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 and “future-proof supply chains.” 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.

In addition, the cosmetics industry continues to grapple with tightening legislation, including PFAS restrictions and concerns over microplastic ingredients’ potential human health risks and environmental pollution. Fermentation-derived ingredients offer naturally clean alternatives that meet both regulatory requirements and consumer expectations for transparency.

ÄIO’s ingredients serve diverse cosmetics applications, from everyday soap to high-performance face moisturizers and serums, and makeup formulations with specialized pigments. This versatility firmly positions ÄIO as an attractive partner for companies across the beauty industry spectrum, from established multinational brands seeking scalable, sustainable supply chain solutions to emerging indie brands driving fast-paced market disruption through formulation innovation.

“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 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.

“We’re seeing unprecedented interest from manufacturers that realize sustainable sourcing is no longer optional,” Koziol continues. “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.”

For additional information:
Media kit with pictures

Mariane Barrier

Head of Commercial
ÄIO (äio tech OÜ)
+372 523 9688
mariane (at) aio.bio

About ÄIO

ÄIO is an Estonian biotechnology company pioneering the production of sustainable, non-animal fats and oils through innovative fermentation processes. Founded in 2022 as a spin-off from Tallinn University of Technology (TalTech) by bioengineers Petri-Jaan Lahtvee and Nemailla Bonturi, ÄIO transforms agricultural and wood industry by-products into high-value ingredients for the food, cosmetics, and oleochemical industries.

Utilizing specialized yeast fermentation, ÄIO’s technology converts sugars extracted from sawdust and other agricultural residues into oils rich in omega-3 fatty acids, antioxidants, and pigments. This approach offers a sustainable alternative to traditional palm oil and animal fats, reducing land use by up to 97% and water consumption by a factor of ten compared to conventional methods.

ÄIO collaborates with over 120 partners to source industrial by-products and test its oils and fats, striving to reduce reliance on unsustainable ingredients and promote a healthier planet.