This is the stage when commercial manufacturing has to commence. Venture capital financing here is provided for product development and initial marketing. The sense of this stage is that the product service is being commercialized for the first time in association with the several types of new projects such as (i) greenfield based on a relatively new, or high technology, (ii) new business in which the entrepreneur has good knowledge and working experience, (iii) new projects by established companies and (iv) a new company promoted by an existing company with limited finance to commercialism new technology.
At this stage, some indication of the potential market for the new product service is available. Partly because of the equity dilution syndrome, in the sense of resistance from the promoters to the dilution of control of the business, and partly due to the unavailability of the small amount of equity investment, the involvement of VCIs in start-up projects is generally and relatively low. The risk perception is very high.