Estonian BioTech developer ÄIO Raises €1 Million Funding

These sustainable oils are designed for use in cosmetics and the chemical industry.

The grant was awarded by Estonia’s Applied Research Programme (RUP), run by the Estonian Business and Innovation Agency (EIS).

“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 commercialising our innovation and to collaborate with forward-thinking beauty and personal care brands around the world.”

ÄIO offers a vegan, eco-friendly alternative to palm, coconut, and petroleum-based oils in cosmetics. Their yeast-derived oils are not only sustainable but also safe for skin and packed with bioactive benefits.

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The €1M grant will fund a three-year R&D project focused on developing these fermentation-based lipids for personal care products. The total project budget is €1.8 million.

“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,” he added.

ÄIO says the grant comes at a crucial time, as new EU regulations—like the deforestation rule—will limit palm oil use and drive demand for traceable, sustainable alternatives.

With the cosmetics industry also facing stricter rules on PFAS and microplastics, ÄIO’s fermentation-based ingredients offer a clean, safe option that meets both regulatory standards and consumer demand for transparency.

Their ingredients can be used in everything from soaps and face moisturisers to serums and makeup making them a versatile choice for the beauty industry.

“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,” 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 in talks with cosmetics manufacturers to use its ingredients in different product formulations. It has also started sending samples to producers as it moves towards the next stage of commercial growth. To support its expansion, ÄIO plans to raise new funding by the end of Q3 2026.

“We’re seeing unprecedented interest from manufacturers that realise 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.“

About ÄIO

Founded in 2022 as a spin-off from Tallinn University of Technology, ÄIO turns industrial waste into nutrient-rich oils using biomass and precision fermentation. Their method uses 97% less land and 90% less water than traditional palm oil production.