Cambridge start-up Neela Biotech has raised £2.1 million in pre-seed funding to scale an AI-guided microbial process that converts food, farm and forestry waste into sustainable aviation fuel (SAF) feedstock, with a pilot-scale trial at a biogas plant planned over the next two years.

The round was led by Elbow Beach, with participation from Ascension, Cambridge Enterprise, Ventures Together and angel investors. Neela also sits in the IAG innovation programme and holds grant funding from Innovate UK and the Henry Royce Institute.

The company's technology converts waste streams into fatty acids — a critical precursor for HEFA-based SAF production — through what it calls Controlled Microbial Upcycling, an AI-guided microbial process. Neela claims this could unlock an abundant new feedstock for a SAF sector still constrained by limited lipid supplies.

Why biogas plants matter to the plan

The conversion process is built on anaerobic digestion, which uses bacteria to break down organic matter such as food waste. Crucially, that process already runs at commercial scale in biogas plants across Europe. Neela's deployment strategy is to bolt its technology onto this existing infrastructure rather than build new facilities — an approach the company says substantially lowers the capital cost of producing SAF at scale.

CEO Deepanshu Singh, who co-founded the company with Frederike Nintzel, framed the technology as a synthetic biology play. "Our Controlled Microbial Upcycling process leverages recent advances in AI-driven synthetic biology to convert diverse waste streams like food and agriculture waste into HEFA-compatible feedstocks," Singh said.

"By integrating our technology with existing biogas plants, we can reduce capital requirements, accelerate deployment, and enable distributed, local production," he added. The £2.1m round, he said, will help Neela "scale towards our pilot and move us closer to making locally-produced SAF cost competitive with fossil fuel".

What separates it from conventional SAF routes?

Neela describes its process as low-energy by design. It replaces the energy-intensive thermochemical processes used in conventional SAF production with a microbial alternative. Combined with waste-derived feedstocks and use of existing biogas capacity, the company argues this cuts reliance on fossil fuels and reduces exposure to oil price volatility and geopolitical instability.

Taken together, Neela says these factors give the technology a credible path to cost parity with fossil jet fuel at scale — a threshold that has eluded most SAF pathways and remains the decisive variable for airline offtake.

Elbow Beach CEO Jonathan Pollock backed the infrastructure argument. "Aviation's fuel bill is only going one way, and the industry urgently needs alternatives that can scale commercially," Pollock said. "Neela's approach is different as it builds on infrastructure that already exists across Europe, avoiding the capital costs that have held back other SAF players, while its low-energy process gives it a credible route to cost parity with fossil jet fuel."

What happens next?

The near-term milestone is technical, not commercial: a pilot-scale trial at a biogas plant within roughly two years, funded by the pre-seed round. That trial will test whether fatty acid output from live waste streams can reach the quality and volume HEFA producers need.

Beyond the pilot sit two harder gates. First, integration economics: whether retrofitting anaerobic digestion plants delivers the capital advantage Neela projects against purpose-built SAF facilities. Second, cost parity with fossil jet fuel — the claim on which the entire business case rests, and which the market will only be able to verify once the technology runs at pilot scale and beyond.

For the waste and resources sector, the significance is straightforward. If Neela's process works at biogas plants, food waste, agricultural residues and forestry by-products gain a higher-value outlet than energy recovery, and Europe's installed anaerobic digestion base becomes candidate feedstock infrastructure for aviation fuel. The two-year pilot window is when that proposition gets its first real test.