I wrote develop, not produce.
You need to hire and pay people with high-tech skills, at least some of which should have experience, otherwise you pay more for failed attempts.
You go through multiple iterations of prototypes, each costing much more than your mass produced final product would.
You need to aquire several certifications depending on the product, each requiring a lot of paperwork, pretests and costly official final tests.
Setting up production and QA may also take some rounds until you reach the desired production cost.
The argument that this is of no concern to a startup because it runs on loaned money anyways is a bit odd.
Anyways, the possibility (it's still a contest) of gaining 250k $ once you finish all of the above is a pretty weak encouragement.