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Dreaming of butter: ÄIO to become a provider of sustainable fats and oils

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Äio was considered the god of sleep and dreams in Estonian folklore. When Petri-Jaan Lahtvee and his colleagues were looking around for a name for their biotechnology startup, they decided they had found the right one. Besides, they had their own dream to use innovative technology developed at the Tallinn University of Technology to produce alternative, sustainable fats and oils. The company, headquartered in Tallinn, was founded in January 2022.

For Lahtvee, co-founding  ÄIO was the culmination of a career spent, up until that point, entirely in academia. He was educated at TalTech and was a group leader at the University of Tartu before he became a full-time professor and group leader at TalTech in food technology and bioengineering in 2021. His goal throughout the years was always to develop locally applicable processes. In the case of Estonia, among the most densely forested nations in the world, that meant turning wood-derived biomass into something else using microorganisms.

“We use microbes to turn a cheaper material into something more valuable,” Lahtvee said. “Usually, these processes are developed and applied in the US, Brazil, or India,” he added, “where sugars are available and converted into something more valuable.”

When ÄIO’s co-founder, Nemailla Bonturi, a native Brazilian and yeast research specialist, joined Lahtvee’s group at TalTech, she brought along some strains of yeast with her that were eventually induced to produce different types of fats and oils out of lignin, a polymer that, together with cellulose, comprises wood. The team had managed to make butter out of sawdust.

ÄIO’s production involves feeding the biomass to the microbes, which digest it and produce oils as part of that process. “Microorganisms are living cells; they multiply and can do it efficiently in the right environment,” said Lahtvee. “The production is similar to beer brewing, except that we brew fats.”

Sustainable alternative to animal, palm, and coconut oils

To scale up production, Lahtvee and colleagues did shop their idea around to different companies but ultimately decided to strike out on their own. After launching last year, they introduced an initial set of products, including red oil, which ÄIO is positioning as a substitute to vegetable, seed, and fish oil; encapsulated oil, which ÄIO believes can be used instead of soybean and palm oil and nutritional yeast; and buttery fat, a spreadable, creamy solution that can be used as an alternative to animal fats, coconut fat, and shortenings.

“We are replacing nonsustainably produced fats and oils with more sustainable alternatives,” said Lahtvee. Adding that the initial trio of ÄIO products was selected based on market demand.

He underscored that such oils and fats are not only used in the food sector. Palm oil, as a solid fat, is typically used in about half of the products in any supermarket, as well as in cosmetics and other products, such as soaps and laundry detergents. To compete, ÄIO must deliver solid and encapsulated fats that have the same consistency as other solid fats.

Scaling the production and markets

However, if you are dying to try some of ÄIO’s buttery fat, you won’t be able to. Currently, production is at a small scale, with about a kilogram produced per week, but that will change early next year when the company opens a laboratory that can make 20 kilograms of oils and fats per week. ÄIO is also raising money to build a demo-scale production facility that could churn out 750 tons of its oils and fats annually.

But the company will also need to secure approval from the European Food Safety Authority before you can try its fats and oils, at least officially. ÄIO is working to acquire such permission with Gelatex, an Estonian producer of cultured meat, and Accelerate Estonia, an arm of the Estonian Ministry of Economic Affairs and Education. According to Lahtvee, the project commenced in the spring.

As it works toward European clearance, ÄIO is also looking into markets in the Americas and Asia for its fats and oils. It will also scale headcount, Lahtvee noted, considering its planned facility expansion. Currently, the firm employs 11 people.

ÄIO has also racked up some investments at home, starting with an Estonian Business and Innovation Agency grant in 2022 of €150,000 to valorise local industrial side-streams into value-added speciality lipids. Earlier this year, it also received €1.5 million from the same agency to build a semi-automated platform to design microbes for turning local by-products into high-value food components. This second project will run through 2026 and will enable ÄIO to digitise its fermentation process.

The Finns have also taken note. In February, Nordic Foodtech VC, a Helsinki-based venture capital fund, invested €1 million into the company to help it achieve its goals. The company also snagged a €150,000 award at Latitude59, the annual startup conference in Estonia. EstBAN, the Estonian Business Angels Network, and Tera Ventures, an Estonian venture capital firm, supported the award.

Partnering with other startups

In addition to its project with Gelatex, ÄIO counts Tallinn’s Fibenol as a partner. The company, a spinoff of the wood pellet production company, the Graanul Invest Group, has developed a process to turn biomass into sugars and lignins that can then be used to make other products, such as fats and oils.

“They are breaking down sawdust into its initial components, and we can use two of their products as a raw material for our process,” said Lahtvee of ÄIO’s cooperation with Fibenol.

“We have designed quite a bit of our process around their products,” he said.

In an interview, Fibenol CEO Peep Pitk noted that ÄIO is using his company’s lignans, trademarked as Lignova, and its C5 lignocellulosic sugar product. “This is a very complex substrate for fermentation and difficult for bugs to eat,” said Pitk, “but ÄIO has a very robust yeast.”

According to Pitk, ÄIO is an “excellent example of an integrated biorefinery” that uses its products and valorises them into fats and oils that can be used in food, cosmetics and other industries. “It’s a good example of add-on industrial developments that can generate locally even more value for end users,” said Pitk.

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