Concept stage of company development: Funding, investors, risks and expectations
At the concept stage of company development (stage 1), you have an idea and are exploring the feasibility of building a technology product or service based on that idea. You’re working to determine how you will build the product or deliver the service, and to identify the target customers, partners, distributors and competitors in your market.
Funding sources for company development
- In Ontario, development costs for technology concepts may be funded through grants and other programs.
- Market research, product design, and other early-development costs are usually funded by the entrepreneur or their family and friends.
Risks to investors
The risk at this point of a venture is generally considered high. While investment capital requirements are relatively modest (< $250,000), the business usually has no revenue.
Funding expectations
The funding received in the concept stage will be used to:
- Develop a technology proof of concept
- Establish the business model
- Generate the financial plan
- Build the pitch presentation
- Generally launch the venture
Learn more about the other stages of company development:
- Startup phase of company development
- Growth or expansion stage of company development
- Later stage of company development
Thinking of raising money? We’ve created a free online course to help you get investment-ready. Check out Introduction to Investment Readiness and learn useful tips, tactics and strategies to prepare for your seed fundraising round.
References
Canada’s Venture Capital & Private Equity Association. Retrieved April 19, 2009, from www.cvca.ca.
National Venture Capital Association. Retrieved April 19, 2009, from www.nvca.org/def.html.
National Angel Organization. Retrieved April 19, 2009, from www.angelinvestor.ca.