Development Stage

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.

BREAKING DOWN '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. Funding Gap

    The amount of money needed to fund the ongoing operations or ...
  2. Corporate Citizenship

    The extent to which businesses are socially responsible for meeting ...
  3. Incubator Firm

    A firm engaged in the business of fostering early-stage companies ...
  4. Research And Development - R&D

    Investigative activities that a business chooses to conduct with ...
  5. Finding And Development - F&D

    A cost incurred when a company purchases, researches and develops ...
  6. Return On Research Capital - RORC

    A calculation used to assess the revenue a company brings in ...
Related Articles
  1. Markets

    Trading With Stage Analysis (NRG, NKE)

    Stage analysis offers market participants a powerful tool to identify current market conditions and make rapid adjustments to strategies.
  2. Investing

    The Basics of Business Development

    What exactly is business development? Sales, marketing, growth? It's all that and more. Investopedia explains the concept and provides examples.
  3. Managing Wealth

    Valuing Startup Ventures

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

    Understanding the Product Life Cycle

    Product life cycle is the period of time during which a product is conceived and developed, brought to market and eventually removed from the market.
  5. Personal Finance

    Is It Worth Paying For Professional Home Staging?

    Buyers need to be able to visualize a house as their future home. Skilled home staging can help them do just that.
  6. Markets

    Sector Rotation: The Essentials

    We look at how the market signals impending economic cycles and sector performance during each stage.
  7. 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.
  8. Personal Finance

    How To Insure Your Most Important Asset - Yourself

    Insuring your human capital is something often overlooked. Don't make the mistake of leaving your biggest asset unprotected.
  9. Markets

    4 Stages Of The Economic Cycle

    Here’s a list of the four basic stages of the economic cycle, and some telltale signs associated with each.
  10. Markets

    Risks and Rewards of Biotech Companies

    We look at the risks and rewards of investing in biotech companies.
RELATED FAQS
  1. Can I get a tax credit from conducting research and development?

    Understand if a company can receive a tax credit from conducting research and development. Learn about the alternative simplified ... Read Answer >>
  2. What is the difference between research and development and product development?

    Understand the difference between research and development and product development. Learn why a company would want to invest ... Read Answer >>
  3. What is the relationship between research and development and innovation?

    Understand what research and development is and why a company or person would want to conduct it. Learn about how it can ... Read Answer >>
  4. What level of research and development compares to sales is typical in the electronics ...

    Discover what level of research and development companies in the electronics sector utilize in comparison to sales, and its ... Read Answer >>
  5. What exactly is a startup?

    A startup is a young company that is just beginning to develop. Startups are usually small and initially financed and operated ... Read Answer >>
  6. What are some of the challenges in real estate development?

    Learn what real estate development is, what developers do, and how real estate development is hindered by both risks and ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center