Entrepreneurs with breakthrough technology don't have to rely on angel investors and venture capitalists to fund their R&D. There are options other than giving up equity: licensing patents and trade secrets is a great way to get a steady income stream in a cash crunch while keeping your ownership stake intact.
That is what Jacqueline Hines, an electrical engineer and head of Applied Sensor Research & Development Corp., is doing. She's in discussions with three companies interested in licensing her Arnold, Md., firm's wireless microelectronic sensors. These adaptable devices can be used to measure chemical-vapor concentrations in the air or to assist in the clinical diagnosis of infectious diseases. Her plan is to help fund product development with cash infusions of $50,000 to $200,000 from these partners every time her scientists hit a predetermined milestone in development. The ultimate goal: get 20% of revenue from royalty income by 2015. Right now, her five-year-old concern is not consistently profitable on its research income, which is slightly under $1 million annually.