I had always thought that the prewar German naval construction (and the threat perceived therein) was based around the construction of several battleships, and not on small, experimental craft like submarines.
You're not wrong about pre-war German naval construction. At the start of the war, the Royal Navy had more submarines than any other fleet in the world, with 77 boats. In comparison, the Germans had 29. However, by the end of the war, the Germans would have constructed nearly 300 submarines, to just over 200 British. This difference is partly attributable to the differing naval strategies of the two powers, and partly due to differences in construction.
British submarines were generally built to fulfill the global mission of the RN at the time. They needed to have long ranges, and were expected to accompany and support the battlefleet. As a result, they needed to be large and fast. This meant a corresponding increase in build time. German submarines did not have to follow such constraints. The vast majority of the submarines were of the coastal UB and UC types. These were small boats, and correspondingly quicker to build.
Strategically, the British were enforcing a distant blockade of Germany. This mostly used light cruisers and Armed Merchant Cruisers, to locate and engage blockade runners. These ships were protected from the German High Seas Fleet by the battleships of the Grand Fleet. Submarines had a small place in this strategy, mostly harassing German operations in the Heligoland Bight, and along the French, Belgian and Dutch coasts. The High Seas Fleet, in comparison, had to attrit the Grand Fleet, and attempt to execute cruiser warfare against the sea lanes to the UK, while maintaining its strength. Submarines were highly useful for both these roles. Submarine minelaying around the major fleet bases, and submarine patrol lines across expected routes of the Grand Fleet held the possibility of weakening the Grand Fleet at no risk to the High Seas Fleet. Surface raiders could interdict merchant shipping, but were very vulnerable to British patrols. However, submarines were much harder to combat, and so could cause far more damage to shipping. Submarines offered large rewards for the German navy, at a very small risk.