A Guide to Preparing for Investment with Techno-Economic Analysis

Gustavo Valente
Jul 15
4 min read

INTRODUCTION

Raising funds for a biotech, foodtech, or synbio startup is no longer just about storytelling; it's about evidence.

Investors are asking sharper questions earlier in the game. They want to know:

▪️ What does your unit cost look like at scale?

▪️ Is your process actually viable beyond the lab?

▪️ How much capital will you need to spend before your process becomes profitable?

This is where Techno-Economic Analysis (TEA) becomes a strategic tool. At Sustech Innovation, we work with startups and incubators worldwide to help teams turn their technical vision into financial confidence, the kind that gets term sheets signed.

This article is your step-by-step guide to preparing for investment using TEA as your framework.

HOW TEA STRENGTHENS YOUR CASE AT EVERY FUNDING STAGE

This TEA guide is especially useful for startups preparing for:

🟢 Seed Rounds – When early investors want to see the commercial potential of your tech, beyond a prototype. A TEA helps justify your funding ask, clarify how you'll use the capital, and build trust in your cost and scale-up logic.

🔵 Series A Rounds – When you're expected to move from “possibility” to “proof.” Investors demand realistic economics: CAPEX, OPEX, cost-per-kg, and payback timelines. A robust TEA is often the deciding factor in due diligence.

🔍 Also relevant for:

▪️ Pre-Seed / Incubator cohorts looking to stand out in grant or accelerator applications with a solid technical-economic roadmap based on a back-of-the-envelope TEA.

▪️ Later-stage (Series B+) startups aiming to expand into new markets or optimize process configurations, but these often require more advanced TEAs.

WHY INVESTMENT-GRADE TEA MATTERS

Most funding pitches focus on market pull, team, and tech novelty. But investors who understand deep tech also ask:

“Can this actually scale—and how much will it cost?”

Without a proper TEA, answers are vague. With it, you can:

✅ Show credible unit cost curves

✅ Model CAPEX, OPEX, and payback periods

✅ Compare process routes and de-risk your roadmap

✅ Run sensitivities to market, feedstock, location, etc.

A good TEA bridges the language of engineering with the language of finance. That’s why it’s a must for serious due diligence.

THE STEP-BY-STEP APPROACH TO INVESTMENT-READY TEA

This isn’t about building a massive financial model overnight. It’s about focusing your resources on the metrics that matter most to investors.

Let’s walk through the investment-preparation TEA workflow:

Step 1: Define the Investment Hypothesis

Start with clarity.

▪️ What round are you raising?

▪️ What milestones will that money unlock?

▪️ What does “success” look like from a financial perspective?

This will guide what your TEA should emphasize, whether it’s CapEx minimization, gross margin, or reaching a production cost that competes with existing products in the market.

Step 2: Build a Realistic Process Envelope

You don’t need every parameter figured out. But you do need:

▪️ A defined production route

▪️ Reasonable assumptions on yields, titers, inputs

▪️ Early-stage block flow diagram-based TEA model

This is where first-pass cost modelling begins. It’s also when founders realize if their ambitions are CapEx-heavy or lean and this is where founders realize some unexpected supporting infrastructure costs need to be considered

Step 3: Estimate CAPEX & OPEX with Benchmarks

At this stage, you need to:

▪️ Size your equipment based on process logic

▪️ Estimate capital and operating costs (labour, energy, raw materials)

▪️ Use vendor quotes or reliable benchmark data from similar technologies

If you’re not careful, ballpark errors here can sink your Internal Rate of Return. At Sustech Innovation, we help you avoid this by sourcing cost data directly from suppliers and engineering partners, ensuring your model is grounded in real, project-specific information

Step 4: Model Scale Scenarios

Investors want to see how your costs change as you grow, from pilot batches to full-scale commercial production.

This means modelling different stages, such as:

▪️ Small-scale demo (pre-revenue)

▪️ Intermediate-scale with partial market entry

▪️ Full-scale facility (target cost-per-kg)

At Sustech Innovation, we build economies of scale analysis for every project, no matter what stage you're in. Whether you're pre-seed or Series A, it’s critical to understand how costs improve as production volumes increase.

TEA at this stage helps you answer:

▪️ When do economies of scale begin to reduce the cost per kg?

▪️ How much funding is needed to reach competitive cost levels?

This is where your financial roadmap meets your process reality.

Step 5: Stress-Test the Business Case

Now add depth:

▪️ Sensitivity to feedstock pricing

▪️ Regional cost differences

▪️ Different financing and production models (e.g., leasing vs. building your own facility, partnering with a co-manufacturer, or using a Contract Manufacturing Organization [CMO])

▪️ Regulatory/tariff exposure

This is where good TEA turns into great storytelling: “We’ve run the numbers, and no matter the scenario, here’s how our strategy leads to success.”

Step 6: Align Metrics to Investor Expectations

Finally, translate your results into VC-friendly language:

Unit cost vs. target market price
Payback period from CAPEX
Internal Rate of Return and Net Present Value at different scales
Funding required per phase

These metrics don’t replace your pitch deck, they strengthen it. It shows you’re not just a scientist with a great idea, you’re building a business.

COMMON MISTAKES TO AVOID

🚫 Building a business model without incorporating TEA insights

🚫 Using generic spreadsheet templates without validation

🚫 Ignoring scale-up constraints and hidden costs

🚫 Underestimating risk factors like feedstock volatility or tech transfer delays

CONCLUSION

An investment-ready TEA isn’t about perfect forecasts, it’s about building investor confidence through structured analysis.

At Sustech Innovation, we’ve helped startups across continents turn back-of-the-envelope calculations into investment-grade models that unlock real funding.

Whether you’re preparing for a demo day, a VC meeting, or a grant application, a TEA is your financial compass.