Estonian biotech startup Äio has raised €6.1 million in venture capital to develop a demonstration plant that will produce sustainable oils and fats from wood and agricultural residues. Founded in 2022 as a spin-off from Tallinn University of Technology (TalTech), Äio aims to provide eco-friendly alternatives to conventional oils used in the food industry, such as animal fats and palm oil.

The company has developed a unique process that uses special yeast to convert by-products like sawdust into food-grade fats and oils. These oils offer a sustainable solution that reduces land use by 97% and water consumption by up to 10 times compared to traditional oil production. In addition, Äio’s fermentation-based production is 10 times faster, producing oils rich in healthy fatty acids and antioxidants.

In 2023, Äio raised €1 million to develop three alternative product categories: encapsulated oil, red oil, and butterfats. These products can replace palm oil in food, cosmetics, and household goods. The startup has since expanded its international partnerships to more than 120 companies worldwide and has been selected for the European Joint Undertaking on Circular Bioeconomy, collaborating on sustainable materials and cosmetic products.

The recent €6.1 million investment, led by Voima Ventures, 2C Ventures, SmartCap, and Nordic Foodtech VC, will fund the construction of a demonstration plant by 2026, potentially located near industrial sites in Estonia or Finland. The facility will scale production of Äio’s innovative oils, furthering the company's mission to reduce environmental impact and offer sustainable alternatives to the global food industry.