Neela Biotech has closed a £2.1 million Pre-Seed funding round led by climate investor Elbow Beach, with participation from Ascension, Cambridge Enterprise, Ventures Together, and strategic angel investors. The Cambridge-based startup converts food, agriculture, and forest residue into fatty acids for use in hydroprocessed esters and fatty acids, or HEFA, sustainable aviation fuel. The capital will support a move from the lab to a pilot-scale trial at a biogas plant over the next two years.
The Feedstock Bottleneck in Sustainable Aviation Fuel
Most sustainable aviation fuel produced today relies on waste cooking oil and animal fat, and the supply of both is limited. The aviation industry burns 300 million tons of jet fuel every year, while the International Air Transport Association expects global SAF production to reach about 2.4 million tonnes in 2026. HEFA is the cheapest SAF on the market but still costs about 1.5 times as much as standard jet fuel, and e-SAF can cost up to 10 times more.
Using Existing Biogas Infrastructure
Neela Biotech uses an AI-guided, controlled microbial process to convert food, agricultural, and forest residues into fatty acids, a critical precursor for HEFA-based SAF production. The approach builds on anaerobic digestion, the same process already running at scale in biogas plants across Europe. By deploying into existing infrastructure instead of building new facilities, Neela lowers capital expenditure and gives UK biogas operators a new source of income as government subsidies wind down.
A Response to Fuel Price Volatility
Fuel costs have risen sharply after the closure of the Strait of Hormuz, which disrupted roughly a fifth of the world’s oil supply. IATA forecast in June that jet fuel would average US$152 a barrel in 2026, nearly 70% above 2025, lifting the global airline fuel bill to about US$350 billion from US$252 billion. Neela argues that its low-energy microbial process reduces reliance on fossil fuels and exposure to oil price volatility and geopolitical instability.
Path to Pilot and Market Test
The £2.1 million round will help Neela scale toward its pilot, and the startup is also part of the IAG innovation program with grant funding from Innovate UK and the Henry Royce Institute. The company plans to install its system at an existing biogas plant rather than build a new facility. Neela has not yet run a pilot and has not published a cost per tonne for its fatty acids, leaving the economic case to be proven.
A Competitive Field in Climate Tech
Neela is entering a busy sector that includes Oxford University spin-out OXCCU, which raised £20.75 million in Series B funding in 2025 to turn waste gases into jet-fuel-range hydrocarbons. Other startups focus on renewable electricity, high-temperature gasification, or alternative waste streams such as demolition waste. Global climate tech venture funding reached US$26.1 billion in the first half of 2026, up 55% on the previous year, but hardware-heavy startups still face a steep path from Seed to Series B.
Neela Biotech’s model combines alternative waste-derived feedstocks with existing anaerobic digestion infrastructure, offering a credible route to cost parity with fossil jet fuel at scale. The Pre-Seed round gives the company about two years and £2.1 million to demonstrate that its process holds up at a working biogas plant. The decisive test will be the cost per tonne of its fatty acids compared with the waste oils it aims to replace.