Estonian biotechnology company ÄIO has secured €1m in funding to accelerate development of 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), organized by the Estonian Business and Innovation Agency (EIS).
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 €1.8m.
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 requires 97% less land and 90% less water than conventional palm oil production, according to company data.
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.
For the cosmetics sector, ÄIO’s 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 a natural alternative to petroleum-derived mineral oils, which can be harmful to the skin and cause environmental pollution.
ÄIO is currently in active discussions with cosmetics manufacturers interested in utilizing 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.
“The cosmetics industry is at a turning point. Beauty brands of all sizes now realize that sustainability isn’t just a nice-to-have, it's an essential requirement driven by increasing customer demand,” said 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,” she added.
“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.”
