Sustainable Oil Startup Äio Raises €1M to Scale Its Palm Oil Successor

The Estonian start-up Äio has raised €1 million to create alternative oils and fats using agricultural byproducts.

The funding comes by way of Nordic Foodtech VC, EAS, and other partners. Founded last year by TalTech bioengineers Petri-Jaan Lahtvee and Nemailla Bonturi, Äio is on a mission to make the food system more sustainable.

The problem with oils

Oil production, particularly palm oil, is driving global deforestation and planet-warming gasses. Äio is working with byproducts from agricultural and wood industries to develop clean oils.

“Turning low-value side-streams into something so valuable is very futureproof and has great scalable business potential,” Mika Kukkurainen, partner and founder of Nordic Foodtech VC, said in a statement. “We are happy to join Äio when taking the first steps outside of university, and already looking forward in helping the team towards future success.”

According to Lahtvee, the current food system is responsible for more than a third of greenhouse gas emissions. Plant-based alternatives, such as vegan meat, require 47-99 percent less arable land, emit 30-90 percent fewer greenhouse gases, and use 72-99 percent less water. But, he says, palm and coconut oils used to make plant-based meat alternatives “do not deliver the same taste and mouthfeel as animal fat.”

Bonturi says not only is the production of these oils not sustainable but “they are unhealthy and can cause allergic reactions.”

The company says it will use its new funding to increase production, test new products, and apply for permits to bring its products to market. Äio has a 2026 target to begin industrial-scale production.

Fermented agro-oil

Äio is one of a growing number of brands working to replace conventional oils and fats. Last November, OmniFoods unveiled patented vegan fat. And last October, the U.K.’s Hoxton Farms closed a $22 Million Series A for cultivated animal fat.

Äio uses fermentation tech with a “red bug” microbe from the agricultural waste in a process patented by Bonturi. “In the same way that we make kombucha, yogurt, bread, and beer, we can turn sawdust or other low-value biomass into valuable and healthy ingredients. Our “red bug” cannot turn water into wine, but it can turn sawdust into food,” explained Bonturi. 

The company’s Red Oil, a product made to mimic palm oil and petroleum-based mineral oils, also has cosmetic and household product applications, the company says.

“As scientists, we were excited that years of research resulted in a real product that could revolutionize the entire food industry and consumer experience,” said Lahtvee. “We highly appreciate everyone who has contributed to our success story, and we will continue to develop the company and its products together with our partners, the leading investor, and the food industry.”