Certain rules do apply when building a start-up company. The core principles of these rules are fundamental across industries, including academia. The following 10 rules guide academic researchers and business-trained entrepreneurs who want to take a leap of faith to adopt the recent advances in sciences for commercialization. These rules provide an entry point and raise challenges to be thought about for a starting entrepreneur. We believe that these rules apply to any innovation-based start-up and help prioritize the most impactful tasks. Understanding these rules will help the founding team, investors, and other stakeholders to launch a successful start-up.

There are several important topics for academic founders that are relevant and must be addressed before founding a science-based company:

To address these questions, universities provide courses and practical workshops for students. Several online courses cover specific details and technical hurdles to transferring technology or knowledge from academia to a start-up. Beneficial are classes on how to write a business plan or develop and pitch an idea, and we encourage researchers to take up such offers.

Given that you have secured unique technical knowledge either as patents (own IP or exclusive rights) or as trade secrets, building a start-up is not a straightforward exercise. It needs constant adaptation, sometimes pivoting from the original business plan. This asks for a great deal of flexibility from the founders: Original assumptions may be changed, new tasks and responsibilities may arise, and the duties and priorities of the team members can change. Due to the initial budget constraints—a reality for pretty much all start-ups—tasks cannot be delegated but must be taken on by the founders. Therefore, the founding team must represent a diversified set of qualifications, not limited to scientific know-how, but also business know-how, sales spirit, manager qualities, and industry knowledge. Based on the authors’ experience, the only thing that can be delegated is the legal aspect. It is essential to have legal expertise available; however, a start-up budget cannot typically finance an in-house lawyer. Moreover, lawyers might be too much of a devil’s advocate. A founding team needs to focus on why things can work and not why they might not.

The founders often work long hours and spend a lot of time together: It is, therefore, vital that team members embrace different viewpoints and respect each other. Similar to a marriage, it will need compromises, and not so different from marriage, it also might not work out. In comparison, this should be avoided by carefully selecting your cofounders preparing for such a scenario. Like a marriage agreement, which protects the partnering individuals and potential offspring, a partnership or shareholders’ agreement to safeguard the company’s interests is a must (here, we suggest consulting a start-up experienced law firm). In this context, it is vital to avoid a potential deadlock situation: Should the founding team consist of only 2 founders, a 50/50 shareholding might represent a danger for the company. Therefore, we advise defining clear rules on decision finding or avoiding the 50/50 shareholding situation.

The next critical point for forming a founding team is the individual founder’s long-term motivation: Why are you building a company? Is a fast exit the goal or rather the formation of a market leader over the next 10 to 20 years? Do you want to solve a problem for society or the planet, or is making money your main driving force? Whatever it is, the team members must be aligned with the time horizon when they embark on their venture.

In summary, it is easy to understand that building a founding team is no trivial task. The following parameters are therefore key when building a great founding team:

Thus, a great team can succeed with a mediocre business idea, while a mediocre team will fail even with a great business idea.

It is hard to sack people. This is even harder if they have become friends and given their best efforts (which was not good enough). How can this be avoided, and why does it have to be done fast if the situation arises?

Even if you did invest a lot of time in recruiting the right talent, inevitably, at some point, some team members will not live up to their tasks. As the company grows, responsibilities grow. A team member who might have been a perfect fit in leading a 3-person team might lose the oversight when managing 30 team members. It is then crucial to act fast: Either you find a new and suitable position for this person or you must say “goodbye.”

Similarly, an entrepreneur must follow his/her gut feeling: If there are signs that a team member is not up to the task, then this is probably the case. Do not wait to resolve this situation. You will not do this person a favor by keeping him/her longer in this position or the organization—he/she will do better in a new place tailored to his/her skills. Hence, the wrong person for the job will slow the company down, and time is of the essence in a start-up environment. In short, hire slow, fire fast.

Anyone who has ever planned and taken on a science project will undoubtedly experience that it always takes longer than planned. No matter how elegant, simple, and straightforward the well thought through research grant proposal looks on paper, breaking new research grounds is more complicated in reality. Similar to a research proposal, writing a business plan is an excellent exercise for founders. Next to being a persuading tool in getting team members and investors on board, it helps to understand dependencies, set priorities, and provide a rough idea of the resources needed to build the company. However, compared to a research proposal, the complexity of the moving parts in a business plan is significantly higher, and, therefore, the capital needed is more difficult to establish.

As a founder, you aim to give away as few shares as possible while at the same time securing the necessary capital to build the company. Two aspects are of importance:

Balancing these 2 aspects—the wish for a minimal dilution and the need for sufficient financing—is not an easy exercise. Do not raise too much money in the beginning. However, the following has universal truth as a guiding rule for seed rounds: It costs more and takes longer. We, therefore, suggest raising double the amount you think is needed—at least in your first seeding round. Furthermore, it is unlikely that things work the first time perfectly, so set your timeline to have at least 12 to 18 months of buffer time that is financially secure for each milestone.

Many founders think that their business idea is unique and nothing short of ingenious. They, therefore, might think that talking about their business idea is risky: The idea might be copied or, even worse, stolen by an evil and, of course, financially powerful conglomerate. With this in mind, they do not talk about their business idea, and if they do, they ask to sign a nondisclosure agreement (NDA) firsthand. They forego many potential opportunities with this: Nobody is aware of what the founders are working on and cannot offer advice. Maybe other teams have worked on the business idea and found it impossible to succeed for structural reasons? Perhaps the founder’s network could provide connections to much sought-after team members or investors?

No professional investor will sign an NDA before reaching a general understanding of the business idea (it would simply constrict an investor’s future activities too much). In general, it is highly unlikely that another entrepreneur has (a) the know-how, (b) the time, and (c) the resources to copy (steal) a business idea. More likely, such a person would want to join the venture or at least offer critical feedback that might help improve the business idea. Therefore, we advise you to talk about your business idea with as many people as possible and execute it quickly. You will get support from many unexpected sides, and your business idea will be sharpened and optimized on the way. As in science, discussing the “killer” experiment with your peers to disproof your hypothesis, it is important to identify this weak spot that could collapse your idea, like a house of cards. Hence, if you fail, fail fast. Moreover, as you strive to derisk your technology in the early stages of commercialization, bouncing back your business ideas with others helps to derisk and improve your path forward with your business idea.

In practice, you have 2 pitch decks: a confidential and a nonconfidential version. The nonconfidential pitch deck states the importance of the problem and how you are able to solve it. This pitch deck indicates the market and customer you will address and covers the conceptual idea without any technical secret but highlights your competitive advantage. With the confidential pitch deck that you share under an NDA, you will dive more into the nitty-gritty of your proposed idea/solution and can share data. Make sure you know your audience to adjust these pitch decks targeted to the audience interest/expertise (e.g., more technical versus financial).

Start-up entrepreneurs usually are short of everything: time, money, and personal resources. It is, therefore, of existential importance to generate returns as early as possible. In other words, it is essential to reduce the “time to market,” i.e., the time span between the foundation of a company and its first turnover generated by making its product available to customers. This can be reached by one elementary exercise: focus.

Founders feel great upon securing the first financing round for a company. People entrusting capital at risk to you and allowing you to build a company is an important milestone. Mainly, those early investors are recruited from the entrepreneur’s existing network. These investors qualify as the “Triple-F-Investors,” i.e., Family, Friends, and Fools. It is questionable, though, whether this type of investor is helpful or—at least—not a burden for the development of your company.

Triple-F-Investors typically do not know much about your industry. Most of them will be quietly proud of what you achieve, but they cannot help you build the company. However, while they might be quietly observing initially, there is a risk that they start to be protective about their investment once the company generates the first successes. Later, these investors can begin to show more interest in your daily business than would be healthy. While they do not understand your industry and the company’s needs, they want to have a say over the strategy or even the operational management of the start-up because they fear for their now much more valuable investment. This can lead to problems and can slow down the firm’s development.

It is, therefore, essential to invest some time in the structure of your capitalization (cap) table. A cap table is a spreadsheet showing the distribution of ownership of the company, the equity dilution, and the value of equity for each financing round. It tracks the company’s equity ownership by the owners, founders, and investors. A note of caution for academic founders to manage expectations: Usually, investors rebalance your proposed cap table. Furthermore, you should be asking the following: What qualifications must investors bring along with their money? Is the investor helpful to envision your company’s future? At what stage is which experience and network useful? Will at least some investors from your seed round be able to invest in future rounds? If no existing investor is investing in future rounds, it might be hard to raise additional capital from new investors. Thus, you grant your investors the chance to invest in something that potentially becomes big—while you should be thankful that they entrust their money to you, you can also be asking for other relevant input.

As a general rule, avoid “dead equity,” never grant board seats to not savvy minority investors, and make sure that your early investors can both invest in future rounds and help the company with their experience and network.

Modesty is a good trait. However, while it is noble to be modest once you are successful, it is not the first thing you should think about when building a company. Academics are usually cautious with their statements and avoid hyperbole of their scientific findings or idea. You need to learn how to sell your idea. Do not shy away from telling the world why you are not just different but superior. Immediately say what your unique twist is. Investors and customers alike must hear about you: being present in the relevant media, being talked about, etc. These are essential assets when building a company. A steady stream of good news will achieve this. Having good news can prove difficult when you create a start-up, which also involves suffering from setbacks. However, there is always something positive to talk about: outstanding new team members, a successful product test, an article about your company, or the last team event you have organized. Make sure people hear of you and never hold back with positive news. If you have to communicate something positive, do it now! There is no reason to wait, and it does not make sense to gather good news and share them all at once. It is much more effective to repeatedly have good news, which will anchor you in people’s memory. While there is the familiar quotation “fake it till you make it,” you should never communicate something that is not true or nonfact based. However, it is helpful to adopt the most positive wording to describe a new achievement in the early days of your company.

Why should customers (and investors) trust you that you really can build the product you plan to? And are you sustainable for the long term? It might be difficult for customers—especially for business-to-business (B2B) customers—to build a business relationship with you if they cannot be sure that you are still around some months from now. How to overcome this?

One effective and not too costly way is to install a top-notch advisory board. For a biotech start-up, ask Nobel prize winners, national science academy members, previously successful veteran entrepreneurs, and professors providing core expertise to complement your team. There is a ranking of scientific advisory board members, probably in the order, as we had listed them above. For a business advisory board, ask seasoned industry veterans to support you publicly by appearing on your homepage and by giving their advice to you. While this can seriously improve your company, it also sends a strong signal to your customers and investors. If this highly regarded professional has joined your advisory board, then certainly there must be something worthwhile about your company.

Usually, it is not difficult to recruit a great advisory board—successful industry veterans might like the idea of supporting a dynamic start-up, and they might even learn something they can use in their careers. Similarly, ask professors and experts with technical knowledge and expertise in areas your company lacks. As a rule of thumb, you can attribute around 0.5% to 1% of your shares to a top-notch advisor over 3 years, depending on what value they bring to your company (time commitment sharing their expertise, network, access to capital, etc.). In many cases, it is worth doing.