Startups create solution to solve problem. There do projects. There build prototype. It might work or it simply don’t.
Doesn’t need to spend a hefty amount but as little as possible. Cost is not much of a concern.
Prototype aims to perform some simple tasks. Raw material could be as cheap as paper cardboard or recycled bottles.
If mechanical movement don’t require precision, parts such as gear could be made of wood or those off-the-shelf items from the blacksmith.
More importantly, prototype has to be the most viable product to achieve some simple objectives, like solving problems to make life better.