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

November 21, 2023

by Justin Petrone

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.

Recouse: e-estonia

AI in real estate: R8 Technologies’ solution cuts CO2 by 20%

November 21, 2023

by Blessing Oyetunde

A beacon of innovation and impact, Estonian tech company R8 Technologies stands at the forefront of real estate solutions amid volatile energy prices and the soaring demand for sustainability. Since its founding in 2017, the company has pioneered AI-driven property management across Europe, stewarding over 3 million square metres of real estate, managing 3% of Estonia’s energy consumption, and delivering over €7 million in savings for property owners in 2022 alone.

At the heart of the company’s mission lies a pressing global concern: the real estate sector’s hefty 40% contribution to worldwide CO2 emissions. “The current methods of buildings’ operations require advancement in digitalisation and automation,” notes Siim Täkker, R8 Technologies’ CEO. “Our data-driven AI solutions not only bolster operational efficiency but deliver considerable cost reductions and cut CO2 emissions by about 20%.”

Introducing R8 Jenny: the human-centric AI for sustainable real estate

The R8 Digital Operator, “Jenny,” is the company’s flagship AI solution, which breathes new life into commercial buildings as sustainable entities. This data-driven AI system is a revolution in human-centric artificial intelligence, meticulously engineered to operate buildings with unprecedented efficiency. It’s a sophisticated digital assistant which integrates into the operational heart of each building, the building management system (BMS), without the need for new infrastructure.

“Our vision of AI is to be more than smart— our solution is intuitive and capable of ensuring comfort and efficiency with little to no human intervention. R8 Jenny understands the heartbeat of a building and its uniqueness, caring for it,” Siim says, highlighting how the solution has evolved to meet the nuanced demands of real estate. This human-centric approach to AI development has been vital in forging tools facility managers can trust and rely on. And the result speaks for itself!

Significant savings and environmental milestones at Mainor Ülemiste

Mainor Ülemiste’s CEO, Ursel Velve, reports transformative savings and environmental advancements attributed to R8 Technologies’ solution implementation.  “In 2023, the deployment of R8’s Digital Operator enabled us to realise significant savings of nearly EUR 122,000 in reduced heating and electricity expenses for the Öpik buildings. Additionally, we witnessed a substantial environmental benefit, cutting down our carbon emissions by 269 metric tons, equivalent to conserving around 1300 trees,” Ursel states. 

“Their system has not only streamlined our operational costs but also enabled us to make more environmentally friendly choices,” she highlights. The capabilities of R8 Jenny have been especially noteworthy, with around 113,000 system adjustments within the last year—a feat beyond human capacity, according to Ursel. Recognising the strategic advantage of the data gathered through R8 Technologies’ system, she says, “The insights allow us to make informed decisions, steering us toward constructing more sustainable and energy-efficient buildings.” 

Looking ahead, Ursel confirms the ongoing partnership with R8 Technologies is set to deepen, particularly within the innovative Ülemiste City Test City. “Within the framework of the Test City, R8 Technologies actively engages in collecting and leveraging data to develop their new models,” she reveals. This initiative marks the campus as a testing ground for R8’s new developments, showcasing a progressive step towards sustainable real estate and the bankability of greentech. 

The journey to innovation

Looking back, the road to this point has been exciting yet far from straightforward. Siim recalls the stormy early days when the team sought to transform extensive research into a viable product. Without existing models on the market, the startup first embarked on its journey with no blueprint, and this came bearing its fair share of challenges.

Their relentless efforts resulted in the first product launch in 2017, marking a significant milestone. But, they soon realised that the complexities of real-world applications were greater than anticipated. “Our initial offerings, while groundbreaking, didn’t fully meet the nuanced needs of the market,” Siim admits. The team found themselves back at the drawing board, reimagining their solutions. Ultimately, they did refine their offerings, finding the sweet spot between operational efficiency and user-centric design.

The team today? A dynamic collective of over 50 individuals, including over 10 with Ph.D. qualifications, bringing extensive knowledge from various domains, like facility management, real estate, HVAC (Heating, Ventilation, and Air Conditioning), and information technology. Merging practical know-how with scientific insight, they have successfully released numerous product functionalities that boost customer satisfaction, enhance operational efficiency, and address evolving customer needs.

The green shift

Peering into the future, Siim anticipates a substantial shift in the energy sector towards proactive and flexible management of green energy, where energy transcends mere production and extends to active management on the consumer’s side. This is where R8 Technologies emerges as a catalyst, bridging the gap between energy consumption and sustainable practices. As renewable sources take centre stage, Siim emphasises the increasing significance of consumers and companies like R8 in effectively managing and stabilising energy usage.

Delving deeper, he highlights the imminent overhaul of the regulatory landscape in Europe. “A shift is underway towards unified sustainable practices and regulations,” he notes. As these new regulations materialise, he envisions fragmented energy markets being consolidated into an integrated entity guided by a shared understanding and streamlined practices. 

Within this evolving framework, Siim Täkker is confident in R8 Technologies’ solutions to expand even further and help more markets manage and optimise energy usage adeptly. “Our technology is tailored for an energy and carbon-efficient future, ensuring smarter, more sustainable real estate practices,” he asserts. With numerous projects in the pipeline, including expansion into Asia, the company intends to not only enhance today’s buildings but also shape a future where real estate development is synonymous with carbon neutrality.

Resouce: e-estonia

Twin transition requires combined effort of the state and the entrepreneurs

November 21, 2023

by Peeter Vihma

We are facing a global challenge of transforming our technology, economy and society into sustainable ones. Digitalisation is widely believed to help this transformation. But how does this actually work? Estonians are at the forefront of asking – and hopefully answering – this question.

Twinning the digital and the sustainable

Despite – or perhaps because — of the many benefits digitalisation brings, many believe that digitalisation is also the pathway towards a more sustainable society. It reduces material input to industrial processes, simplifies service models, and reduces the need for human input.

However, despite this widespread belief, digitalisation has a material footprint. We cannot disregard that digital infrastructure and all digital solutions, including data production and distribution, account for roughly 10% of global energy consumption and contribute to greenhouse gas emissions at the level of the aviation industry. Although this is “merely” 2-3% of the global emissions, it is still not “green” when we must fight for each metric ton of emissions reduction.

The sweet spot, where digital and sustainable transformation ambitions meet, is often dubbed “twin transition”. However, this twinning of the two fields doesn’t just magically happen. We need to implement these transitions together consciously. For this, much thinking needs to be done and fast.

Mission-oriented public policy

Although we are used to innovation stemming from the competition in the market, it is becoming increasingly clear that public administration in states and cities has a crucial role to play in the twin transition. This is what researchers at Ragnar Nurke Institute of Innovation and Governance at Tallinn University of Technology (TalTech) focus on.

“One of the main ways in which current ambition for twin transition is articulated in our societies is through mission-oriented innovation policies such as the EU Missions,” explains Professor Erkki Karo, director of the institute.

Just like the call to “Let’s put a man on the moon!” by US President Kennedy gave us a plethora of innovations such as the laptop, vacuum cleaner and freeze-dried food, we are expecting the sustainability-oriented EU mission to boost creativity and growth, produce new markets and generally change the way we live.

Yet, several challenges are entrenched in this mission’s establishment and functioning. First, there is a need for politicians and other change agents to legitimise the mission. This is not easy in the context where political opponents, notably populist ones, are ruthlessly exploiting the doubts and uncertainties of such a grand aim.

Need for “agile stability”

Second, the mission must be implemented with public bureaucracies, academia and entrepreneurs. What kind of organisations are required for this task? This question is at the forefront in the recent book “How to Make an Entrepreneurial State. Why Innovation Needs Bureaucracy” by professors Rainer Kattel, Wolfgang Drechsler and Erkki Karo at TalTech. Awarded the prestigious Academy of Management George R. Terry book award (granted annually to the book judged to have made the most outstanding contribution to the global advancement of management knowledge ), the book argues that innovation requires entrepreneurship-like, experimental bureaucracy.

“Yet, this does not mean we should rely exclusively on a start-up mentality in public administration. We still need to provide the public value of stability and predictability. Thus, we suggest that a combination of stable bureaucratic organisations such as ministries and fluid creative organisations such as innovation agencies can create “agile stability” for creating, funding, regulating and procuring innovations,” says Prof. Karo.

Problem-oriented collaboration, co-creation and continuous learning are key qualities for setting up these networks for improved administration. Yet, the more difficult question is understanding the capabilities through which public administrators are able to destabilise and disrupt existing practices and business models. Without these, legacies and entrenched practices may lead to the point made by Richard Nelson, an economist, in his prominent book “The Moon and the Ghetto”: if we are so technologically advanced we can land a man on the moon, why can’t we still solve the problems of the ghetto? Pollution and degradation of our land, sea and air clean being the “ghetto” of current times, and positioning this as the core of the mission is one step closer to harnessing the digital to clean it out.

Creating new business models

These ideas are attempted to put into practice not far from the campus of TalTech, at the offices of Rohetiiger (Green Tiger), a collaboration platform at the forefront of Estonian sustainability thinking. Their Head of Development, Mikk Vainik, has been entrusted with the daunting task of creating a roadmap for the carbon-neutral, biodiversity-improving business models in Estonia. With a background in supporting digital innovation and systemic change at Accelerate Estonia, Mr Vainik is far from being blinded by the digital gospel.

“Digitalisation is just one tool that can create market advantage,” says Mr Vainik. “It would be easy to say that when we have digitalised X number of services, we have also saved Y amount of emissions. But we just don’t have that knowledge.”

Yet, Estonians are bold enough to want to find out. A recent audit commissioned by the Ministry of Economic Affairs and Communications showed that digitalising the public sphere involves considerable material in- and throughput. For example, just the laptops that Estonian civil servants use over their 5-6 years lifespan amount to an equivalent of more than 5000 diesel cars running constantly for a year. We are not even talking about the data centres. Or, as an example from the business realm, Kõu Mobility Group, a micromobility company, has consciously thought through the material footprint of their hardware and software during the entire life-cycle.

Problem-oriented, not technology-oriented entrepreneurs

Hence, focusing on just the technology may be short-sighted.

„Entrepreneurship aims to solve problems,” says Mr Vainik. “I have become increasingly sceptical of the idea of a “technology-based enterprise”. Because if you focus too much on a certain technology — blockchain, AI, machine learning, whatever it is — then the technology itself becomes a vanity meter and blurs the cause you were fighting for. Of course, this attitude is quite difficult to convey to industries where technologies are large and require years of investment.”

Mr Vainik suggests that one of the potential ways of creating synergy between public administration and businesses is to propose business models that correspond to the sustainability criteria and see how they catch on, and if they do, then quickly and powerfully support them by both administrative and entrepreneurial means, such as conditional loans.

“It is always a bit of a gamble because although we expect the global economic cards to be reshuffled in the coming decades, we do not know exactly how to become the card dealer,” says Mr Vainik.

“We do know that we have technologies and business models in Estonia that are ready to be scalable, such as Icosagen or Skeleton, and we should not lose momentum. They are focused on solving problems in their field and have a new technological solution that allows creating benchmarks.”

There is still tremendous room for developing agile stability in the cooperation of the public and private spheres. Yet, there is hope that by posing challenging questions and not shying away from the answers, digitalisation can be harnessed to the sustainability transformation.

Resouce: e-estonia