ÄIO, a Tallinn-based BioTech company developing sustainable, non-animal fats and non-vegetable oils through innovative fermentation processes, has secured €1 million in funding to accelerate development of safer and more ecological alternatives to traditional oils used in cosmetics and chemical industry applications.
The funding comes in the form of a grant from the Estonian government-backed Applied Research Programme (RUP), organised 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.”
Founded in 2022 as a spin-off from Tallinn University of Technology, ÄIO uses biomass and precision fermentation to transform industrial side streams into nutrient-rich oils and fats. The process reportedly requires 97% less land and 90% less water than conventional palm oil production, according to company data.
For the cosmetics sector, ÄIO says their 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 an alternative to petroleum-derived mineral oils, which can be harmful to the skin and cause environmental pollution.’
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.
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 €1.8 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 that the grant’s timing aligns with major regulatory shifts, particularly the EU’s deforestation regulation that will significantly impact palm oil sourcing and create urgent demand for traceable, sustainable alternatives and ‘future-proof supply chains’.
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 the company says meet both regulatory requirements and consumer expectations for transparency.
ÄIO’s ingredients serve diverse cosmetics applications, from everyday soap to high-performance face moisturisers and serums, and makeup formulations with specialised pigments.
“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 currently in active discussions with cosmetics manufacturers interested in utilising 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.
“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.“
Read the orginal article: https://www.eu-startups.com/2025/07/estonian-biotech-developer-aio-secures-e1-million-to-develop-greener-alternatives-in-cosmetics-products/
