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Agri food tech

Estonian start-up raises €1M to develop oils and fats from sawdust

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3 min read
AUTHOR: Fiona Holland
red oil being poured from glass cyclinder, held by hand in blue rubber glove

Tallinn-based biotech company ÄIO has secured €1 million in funding to develop sustainable and healthy edible oils and fats made from fermenting agriculture side streams like sawdust.

ÄIO’s aim is to create more sustainable and healthier alternatives to animal fat and other plant-based fats, such as palm and coconut oils, which are often used in the production of plant-based meat alternatives.

“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,” said ÄIO co-founder Nemailla Bonturi. “Our “red bug” cannot turn water into wine, but it can turn sawdust into food.”

During the company’s research carried out in Estonia, industrial by-products such as sawdust were fermented using a similar process to brewing beer or raising bread with yeast, to produce edible fats rich in omega-3 fatty acids and antioxidants. Adding a ‘red bug’ microbe, which Bonturi created and patented, to the fermentation process helped to turn wood and other agricultural side-streams into edible oils and fats.

ÄIO was founded in 2022 by Bonturi and Petri-Jaan Lahtvee, both bioengineers from Tallinn University of Technology. The products the start-up hope to launch for use in the food industry are its encapsulated oil, which can substitute palm oil, vegetable oil, animal fats or nutritional yeast, its buttery fat, which can substitute coconut fat and animal fat, and its RedOil – a carotenoid-rich product suitable as a substitute for fish or seed oil.

Palm and coconut oils used to make plant-based meat alternatives do not deliver the same taste and mouthfeel as animal fat,” added Bonturi. “Also the production of these oils is not sustainable, they are unhealthy and can cause allergic reactions.”

Venture capital fund Nordic Foodtech VC contributed to the investment round, alongside EAS and other partners. The firm holds a portfolio of 10 companies so far, including Nordic Umami Company which closed its €1.8 million seed round earlier in January. ÄIO marks Nordic Foodtech’s first investment in the Baltic countries.

Mika Kukkurainen, Founder and Partner of Nordic Foodtech VC said: “Turning low-value side-streams into something so valuable is very futureproof and has great scalable business potential. 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.”

Following from the funding round, the start-up will work to increase its production capacity, and continue to test its products. It must also apply for novel food approval in order to launch on the European market and hopes to begin production on an industrial scale by 2026.

Co-founder Petri-Jaan Lahtvee commented: “As scientists, we were excited that years of research resulted in a real product that could revolutionize the entire food industry and consumer experience.

“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. We will also continue to work with TalTech to train the next generation of bioengineers”.

The company’s team is made up of six international experts in bioprocessing, synthetic biology and food technology.   

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