Say, I'm entrepreneur that want's to make a nano device for a great new product but do not have any real money and won't for some time. The best way to raise money to build the devices is to demonstrate the a concept with a prototype.
Wait, there seems to be a problem with this logic. I need a prototype to raise money but I need money to build the prototype. What the... Thus, starts the self funding phase of the start-up. Yikes!