Development Stage

AAA

DEFINITION of 'Development Stage'

A company that is in a preliminary or early state of its corporate life. A development stage company is characterized by its focus on early-stage business activities, such as research and development, market research or construction of manufacturing facilities. Development stage companies are generally underfunded and likely to be on the lookout for sources of capital.

INVESTOPEDIA EXPLAINS 'Development Stage'

While development stage companies usually have limited revenues and earnings, the prospect of substantial profits in a few years time, makes them attractive investments for risk-tolerant investors. Early-stage companies that can successfully grow their business and graduate to the big leagues over a period of time, are likely to reward their shareholders well. Since a substantial proportion of development stage companies fail, a diversified approach is necessary when investing in such companies.

RELATED TERMS
  1. Capital Pool Company (TSX Venture)

    A new, fledgling company trading on Canada's TSX Venture exchange ...
  2. Product Life Cycle

    The period of time over which an item is developed, brought to ...
  3. Acceptance Testing

    A functional trial performed on a product before it is put on ...
  4. Venture Capital

    Money provided by investors to startup firms and small businesses ...
  5. Research And Development - R&D

    Investigative activities that a business chooses to conduct with ...
  6. Donation-based Crowd Funding

    Donation-based crowdfunding is a way to source money for a project ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Entrepreneurship

    How Venture Capitalists Make Investment Choices

    In order to increase your odds for receiving funding, here are some criteria considered by venture capitalists.
  2. Markets

    Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.
  3. Entrepreneurship

    Valuing Startup Ventures

    Valuing a company is a difficult task, regardless of the size of the business - but these methods can help.
  4. Entrepreneurship

    Reality Check: Why Startups Fail

    New ventures have only a 50% chance of making it through the first five years. Find out why.
  5. Markets

    Buying Into Corporate Research & Development (R&D)

    Investors take note: companies that cut research and development are in danger of saving today but losing big tomorrow.
  6. Entrepreneurship

    Business Startup Costs: It's In The Details

    Don't overlook the details when starting up a business. It's the small expenses that have the potential to make or break a great idea.
  7. Entrepreneurship

    Go To College Or Become An Entrepreneur?

    The rising cost of higher education and high unemployment rate following the Great Recession has caused many young people to question the value of college.
  8. Entrepreneurship

    Best Checking Accounts For Small Businesses

    What you need to know to choose the best checking account for your small business – and where to look.
  9. Entrepreneurship

    How to Make Money with YouTube

    YouTube is the third most visited site in the world, and numerous people are making money thanks to the site's popularity. Here's how you can do it.
  10. Investing

    What is Asset Management?

    In the investment world, asset management refers to active management of an investor’s portfolio by a financial services company – usually an investment bank.

You May Also Like

Hot Definitions
  1. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  2. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  4. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  5. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
  6. Irrevocable Trust

    A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets ...
Trading Center