Uncertainty must be resolved at each phase, since greater funds are needed for each step. An investor is making a subjective decision based upon perception of risk and reward. The availability of different sources of capital, primarily debt or equity, depends primarily on the developmental phase and the probability of successful commercialization. What does change in the pattern of a life cycle is the magnitude of the sales and the time for each stage in the life cycle. An extreme example of a short life cycle might be the Osborne computer.
Table salt is at the other extreme.
The focus of these notes is the embryonic stage of the business life cycle and the sources of money that are available to firms in this stage of growth. The five phases are discussed below. The idea phase is the creative step where the business concept is established. The business idea can come from brainstorming, for example, speculating on how the application of a technology can better fill customers' needs. Some successful businesses are even the result of serendipity or the accidental discovery of a desirable product or service.