This paper presents the preliminary work for developing guidelines to ensure that industry-sponsored projects in first-year courses aid, not hamper, retention of students. Specifically, the overall research plan includes the following steps: (1) investigating the appropriateness of industry projects in a required introduction to engineering design course (approximately 1000 students per year), (2) assessing the impact of industry-sponsored projects on first-year students' learning and retention, and (3) promoting an awareness of issues involved in successfully introducing industry projects in the first year. It is expected that the outcomes of this work will result in guidelines widely applicable by other institutions looking into or currently using industry projects in the first year, thereby addressing the recognized national need of increasing retention rates, especially amongst women and minorities. This paper covers a review of potential factors affecting industry-sponsored projects' appropriateness at the first year, and related preliminary data. (Contains 3 tables and 1 figure.)