Estonian biotech innovator ÄIO has secured €1M in grant funding to advance the development and scaling of sustainable oil alternatives for the cosmetics and chemical industries. In response to tightening regulations and heightened consumer awareness surrounding health, ethical sourcing, and environmental sustainability, the company is intensifying efforts to replace animal fats, palm, coconut, and mineral oils with fermentation-derived solutions.
Founded in 2022 as a spin-off from Tallinn University of Technology (TalTech), ÄIO utilizes biomass and precision fermentation to convert industrial side streams into nutrient-rich oils and fats. This process requires up to 97% less land and 90% less water than conventional palm oil production. The resulting lipid-rich ingredients serve as high-performing, cost-effective substitutes for traditional oils used in personal care products — offering nourishment, bioactive benefits, and reduced environmental impact.
The €1M grant, issued by the Estonian Business and Innovation Agency (EIS) under the Applied Research Programme (RUP), will fund a three-year R&D initiative focused on microbial lipids tailored for cosmetics and personal care formulations. The total project budget is estimated at €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.”
The timing of the grant aligns with incoming EU deforestation regulations that will heavily influence palm oil sourcing practices. Fermentation-based ingredients such as those produced by ÄIO offer traceable, consistent, and climate-resilient alternatives, strengthening supply chain security amid shifting legislation and global demand.
Ongoing industry-wide concerns regarding PFAS, microplastics, and harmful mineral oils are further accelerating the search for cleaner ingredients. Fermentation-derived oils address these challenges by delivering compliant, transparent, and natural components for modern formulations.
ÄIO’s ingredients have shown versatility across a broad spectrum of cosmetics applications — including soaps, facial moisturizers, serums, and pigmented makeup products — making the company a promising partner for both global corporations and disruptive indie brands seeking sustainable innovation.
Cosmetic manufacturers have already begun evaluating sample formulations featuring ÄIO’s ingredients. Commercialization plans are underway, with further fundraising scheduled by the end of Q3 2026 to support international expansion. The global alternative fat market is forecasted to grow by 6% annually, reaching $4.5 billion by 2032.