Therefore, the founders need a basic education in finance and to understand the different types of financing available in order to make wise decisions.

If a company is trading control for money, get to know the financer and make sure that company management can effectively work with that person (or persons), and that it is someone with sufficient experience in the technology to make good decisions.

Be careful about encumbering the company too heavily up front. If you promise inventors or early investors a significant royalty percentage, what will be left for later investors that finance the bulk of the research? Similarly, employment agreements with significant termination packages may deter future investors, as might onerous share ownership packages.

The company will also need an excellent business plan that addresses its FDA, patent and market strategies. Local technology incubators can help with this and there are several good books on writing a winning business plan for the technology start-up. Consider the advice of serial entrepreneurs and investors when they critique your business plan, and update the plan as needed.

The company should apply for every available grant, award or prize, including scientific grants, small business or technology grants, state grants and awards or prizes. Good writing skills are needed to be successful at application writing, and its not necessarily the same as writing scientific papers. Consider using or consulting with a professional grant writer if company grant proposals seem to be failing.

More Tips for Scientist Entrepreneurs

To learn more about how to bring a product out of the laboratory and transition from the role of scientist to that of entrepreneur, please browse the rest of the tips for science entrepreneurs in this article series:

• Transitioning from Science to Sale - We introduce our 10 tips for entrepreneurial scientists who want to take their science to market.
• 1. Getting it in Writing - Before you get too far along in the process, it's imperative that you put together written contracts that define ownership rights, confidentiality and other important obligations and understandings.
• 2. Cultivating A Culture of Invention - Encouraging invention is the first step to creating valuable intellectual property. We look at what organizations must do in order to motivate employees to create proprietary science and apply for patents.
• 3. Getting Inventorship Right - Patent laws require that you get inventorship right. Get it wrong and you can lose the patent. Here are some simple ways to avoid making a mistake in the naming of inventors.
• 4. Using Hardbound Notebooks - Your lab notebook could end up being used as evidence to invalidate your patent claim. We discuss the proper use of hardbound lab notebooks to ensure proper IP protection.
• 5. Planning a Patent Strategy - Filing patents can be an intimidating endeavor, but there are some best practices for scientist entrepreneurs that you ought to know about.
• 6. Planning an FDA Strategy - Knowing these tips for getting FDA approval will come in handy if you are working on new drugs or medical devices.
• 7. Loosening the Reins - You can't do it all. Scientists entrepreneurs must know when to transition leadership and when it's time to bring in the pros.
• 8. Stirring Public Interest - Promoting your science before you commercialize can smooth the road to funding...but there are a few mistakes you can make if you are not careful.
• 9. Financing the Company - It takes money to make money. Here are a few things to know about the funding process.
• 10. Preparing for Due Diligence - Due diligence involves intense scrutiny of all of your documents. It's critical to keep your documents well-organized and readily accessible.