Teams Part 1: Executive Management

Management Teams: Building a Winning Lineup

Creating great management teams in a small market is essential—and very hard to do.

By Michael Schmanske, with Paulo Fontes, MD, FACS and Michael Hufford, PhD

The Lack of Seasoned Management in Early-Stage Biotech Companies Has Consequences

The absence of experienced executive leadership creates substantial fundraising and operational vulnerabilities that materially impact both initial company formation and subsequent performance trajectories. The effects may not be immediate but instead comprise a gradual accrual of suboptimal decisions or missed opportunities in resource allocation, timeline management and strategic development. All too often, this leads to companies struggling to attract seed capital, then failing to meet the milestones needed to drive a successful A-round raise.

Unfortunately for academic researchers, research and/or clinical excellence often do not translate into other areas of operational ability. Put another way: Stories of academics turning into successful C-suite executives are the exception, not the rule. A successful life science executive requires multiple areas of sector expertise not normally possessed by academic specialists. Drug development is one of the most—if not the most—regulated industries in the world. Navigation of these complex regulatory frameworks necessitates experienced executive oversight—particularly in developing comprehensive regulatory strategies, managing regulatory agency interactions, ensuring compliance with GxP standards for drug development and executing drug development programs that must meet multiple safety, efficacy and regulatory milestones. Successful leaders exhibit strong ‘people skills’ and over the years have cultivated a broad network of specialized consultants to augment and oversee critical functions that complement the initial management team.

Individual operational challenges are further compounded by strategic partnership imperatives, where less experienced management teams encounter significant obstacles in opportunity identification, risk assessment, term sheet negotiation, alliance management and intellectual property protection. Many startups fail due to improper prioritization of projects or utilization of the often limited assets available to newly formed life science companies. Executive leadership in biotechnology demands extraordinary commitment beyond conventional business hours—requiring sustained dedication and resilient problem-solving capabilities to address unforeseen challenges while maintaining progress toward critical organizational milestones. A good CEO needs to understand that scientific founders need to be hyper-focused on details while strategic management requires the ability to see both the trees AND the forest. A company that has the same executive filling both roles is often ill-equipped as a result, and often doesn’t know it.

Doing it Yourself

Entrepreneurs are self-starters driven by a do-it-all mentality. Many believe that if they can handle a task themselves, they should—whether out of necessity, control or sheer habit. For early-stage startups operating on a thin budget this is extremely rational and effective.  But just because you can do the job, doesn’t mean you should—time is your most valuable resource, and spreading yourself too thin can slow growth and dilute focus. The most effective founders know that leveraging the right team, delegating strategically and focusing on high-impact decisions is the difference between building a business and merely running one.

New Tricks: Academic Founders Transitioning to CEO Roles

Part of the problem with a distracted executive team is bandwidth and priorities, but there is also a skill problem. Many of the talents that form an excellent researcher are not the same as those that create a great business leader. The transformation from academic leadership to corporate executive presents substantial operational and strategic challenges defined both by the structure of the biopharmaceutical industry and the peculiar culture that is academia.

The foundational paradigms of academia—characterized by emphasis on scholarly publication, peer review processes, grant-based funding mechanisms and strict hierarchy based on publications and tenure—stand in marked contrast to industry imperatives, where successful integration and execution of complex operational initiatives within constrained temporal and budgetary parameters is paramount.

Experience matters and academic founders frequently encounter significant obstacles in adapting to commercial decision-making frameworks. While academic researchers demonstrate exceptional capabilities in scientific innovation and experimental design, they often lack requisite experience in critical business competencies—including operational management, regulatory compliance, market intelligence, competitive strategy formulation, capital deployment, business development, strategic partnerships and commercialization planning.

Notably, as specialists, many academic founders possess limited expertise in translational medicine, or cross-disciplinary utilization particularly regarding FDA approval pathways and the design and execution of first-in-human clinical trials. The temporal dynamics of academia contrast sharply with industry imperatives, where continuous pressure for milestone achievement and strategic execution creates an operational environment fundamentally different from academic settings. The transition from academia’s open information exchange model to industry’s proprietary knowledge environment places biotechnology executives in a position where strategic intelligence is both costly and fragmented.

The worlds of academic research and the biotechnology industry operate under fundamentally different principles. While a strong scientific background is essential for understanding biotech’s technical aspects, it doesn’t inherently prepare individuals for corporate leadership or operational management. Industry executives must demonstrate operational excellence and adaptability in fast-paced environments while solving a barrage of daily problems—qualities rarely tested in the relative stability of academic roles. Academic founders often view biotech ventures as extensions of their controlled research environment, focusing mainly on scientific merit rather than regulatory requirements, the business’s economic viability, competitive market dynamics and shareholder expectations central to commercial success.

This transition demands a mindset shift from writing grant proposals to developing business strategies, from managing graduate students to leading cross-functional teams, and pursuing discovery to creating shareholder value. Academic credentials, though valuable in research, do not automatically translate to executive competencies—where execution and agility are critical. Many academic founders initially struggle to navigate this cognitive realignment, underestimating the differences between academic and commercial biotech operations and the need to prioritize precise business principles over purely scientific goals.

Misconceptions About Academic Skills Translating to Business Management

Researchers and business professionals have a lot in common. Both career types attract individuals with high analytical skills, confidence and a strong ego.  However, the dichotomy between academic excellence and commercial leadership encompasses multiple fundamental competencies that materially impact company performance.

Good Enough vs. Analysis Paralysis

The imperative for rapid, data-driven decision-making under conditions of market uncertainty presents a particularly significant challenge for academic founders. While academic researchers demonstrate proficiency in grant portfolio management, corporate financial stewardship demands sophisticated competencies across multiple domains—including working capital management, strategic fundraising initiatives and commercial risk assessment.

Beyond the inherent complexity of executive leadership roles in biotechnology, academic professionals frequently encounter substantial challenges adapting to the operational intensity and temporal demands of addressing rapidly emerging, often unanticipated strategic and tactical challenges. This environment necessitates strict operational discipline and decisive action—a paradigm fundamentally different from the autonomous decision-making structure typical in senior academic positions.

Timelines and To-Do Lists

Unlike academia, industry imperatives demand accelerated execution velocities with substantially compressed deadlines where delays can have direct—and dire—financial consequences. Missed clinical trial deadlines, late regulatory filings or lagging product development can rapidly jeopardize funding and investor confidence. For biotech startups, progress must be measurable, with every milestone tied to financial and operational success.

Managing deliverables in industry also means coordinating diverse teams with distinct skills and priorities—a challenge often described as “herding cats.” Industry demands accountability, clear deadlines and measurable outcomes—leaving little room for the autonomy and loose structures common in academia. Leaders must align strong personalities around shared objectives, track progress closely, and ensure deliverables are met without excuses or ambiguity.

Startup expectations are driven by external pressures from investors, boards and stakeholders who expect transparency and results. Investors, in particular, may push for accelerated progress, forcing leaders to balance ambitious targets with scientific feasibility. Even in good times the CEO of a startup is usually the company’s de facto investor relations contact with all of the handholding and interaction that requires.

The Challenge of Attracting Experienced Executives

Relinquishing control is one of the hardest transitions for an entrepreneur, not just operationally but emotionally. In the early stages, every decision—from the first fundraising pitch to product strategy to hiring—is deeply personal; your company is a reflection of your vision, effort and risk tolerance. This hesitation is natural, but clinging too tightly to control can bottleneck growth, turning the founder into a limiting factor rather than a driving force. Recognizing this shift—moving from being the person who does everything to the person who sets direction—requires a mindset change from founder to leader.

Beyond the emotional hurdle, there are economic and operational realities to consider. Senior executives bring experience, networks and strategic insight that can dramatically accelerate a company’s trajectory, but they also command high salaries and equity stakes. The real question isn’t just “Can I afford to hire this person?” but rather “Can I afford not to hire this person?” A skilled executive can free the scientific founder to focus on long-term vision and high-impact decisions rather than getting lost in day-to-day execution. The key is to define where their expertise will provide the most leverage—whether it’s scaling operations, refining go-to-market strategy or strengthening investor confidence—and ensuring their role aligns with the company’s stage and trajectory.

Big Fish in Small Ponds

Early-stage biotechnology enterprises in smaller or emerging markets face unique challenges in attracting and retaining top-tier leadership talent. Unlike major biotechnology hubs, where clusters of talent exist across multiple organizations, smaller markets will never match the sheer volume of available workers. As a result, additional incentives or headhunting is required just to fill middle management or task-specific roles.

Activity begets activity. In sector hubs, the competitive environment itself drives talent movement. Established firms, startups and investors continuously hire, fire and promote executives, creating a fluid and self-replenishing ecosystem of opportunities. Executives in these markets benefit not only from greater availability of leadership roles but also from heightened visibility among stakeholders who are actively searching for the “next opportunity.”

Even the low cost of living often touted by less urban regions can counterintuitively diminish small markets’ attractiveness. If total compensation scales with the local market, executives find themselves losing out. The compensation differential encompasses not only base remuneration but extends to comprehensive benefits structures, equity participation and executive incentive programs that seasoned leadership candidates routinely anticipate and are valued vs. a global scale not a local cost of living. For mobile executives, a low-cost environment—where a $500,000 house in Pittsburgh might cost $1.25 million in New Jersey—reduces the transferability of their wealth and limits lifestyle benefits they might otherwise enjoy in higher-cost markets. As a result, candidates may perceive small markets as stagnant or less rewarding destinations.

Finally, small markets receive less national and global attention within the biotechnology industry, a factor that plays a crucial role in executive career-building. Leaders aiming to showcase their success and advance their careers often prioritize roles in high-visibility ecosystems, where innovation, media coverage and investor activity converge. Emerging markets, by comparison, can feel isolated and offer fewer opportunities for executives to establish themselves as key players in the industry.

While remote work options have expanded access to talent beyond local boundaries, this approach often remains a short-term patch rather than a long-term solution. For sustained growth and scaling operations, biotechnology enterprises must contend with the inherent limitations of small markets and explore strategies to attract leadership that aligns with their development needs.

Compensating Experienced Executives as a Startup

Raising sufficient funds to offer competitive salaries for C-level executives is a significant challenge for startup biotech companies—all the more so in smaller markets. To attract and retain experienced leadership, many startups employ creative compensation strategies to align with their financial capabilities and growth objectives.

Structured vesting schedules, where equity options vest over time or upon achieving specific milestones are standard for innovation companies. This method incentivizes executives to contribute to the company’s long-term success and helps retain key talent during critical growth phases. With any equity-based compensation plan care should be taken to guard against dilution and to manage any executive turnover. Be conscious of what happens to vested or unvested equity grants if an executive is terminated.

As alternatives, consider stock option pools which are created intentionally during the initial inception and offer executives the opportunity to purchase shares at a predetermined price—potentially resulting in significant financial rewards if the company performs well. Another creative approach uses phantom equity plans that grant executives the financial benefits of stock ownership without diluting existing shareholders’ equity.  Both options are examples of clever tools for companies wishing to preserve equity while still providing competitive compensation packages.

Startup biotech companies have many difficulties attracting and compensating top talent to help with fundraising and navigate the complexities of the industry. However, they have a very powerful currency denominated in hope. Creative compensation packages use that more than anything to not only make executive roles more appealing, but to also ensure that executives’ interests are closely aligned with the success of the company.

Alternatives to Full Time Hiring: Innovation Isn’t Just for Technology

Some very different management models are also being explored which provide startups and growing companies with flexible, high-impact expertise, without the constraints of traditional hiring. Programs like Executives in Residence (EIR) and fractional executive teams are charting new paths for organizations to bring in the expertise needed to drive growth and success.

Rent to Own: Executive in Residence (EIR) Programs

Executive in Residence (EIR) programs employ seasoned industry professionals collaborating with academic institutions or business incubators to mentor and guide emerging entrepreneurs and startups. The University of Pittsburgh (Pitt) describes how their program assists founders, “As current or former senior leaders in a range of well-respected organizations, they know firsthand what it takes to reach the top ranks in the business world.”  

Executives join EIR programs for various reasons. Many seek to stay connected with emerging trends and innovations, which can be intellectually stimulating and professionally rewarding. Others find that participating in EIR programs allows them to expand their professional networks and potentially identify new investment or business opportunities. The programs can act as a valuable vetting and hiring platform as well. Many executives are hired to full time positions at companies they first came to know as advisors as an EIR.

For example, venture capital firms often leverage EIR roles to evaluate whether an executive is the right fit to lead a portfolio company, serving as a proving ground before making a formal leadership hire. This arrangement benefits both sides: The organization gains deep insights into the candidate’s performance and cultural fit, while the executive gets hands-on experience with the business, ensuring alignment before committing to a full-time role.

Carpooling: Fractional Executive Teams

Pools of part-time or contract-based senior professionals are becoming a strategic asset for companies seeking top-tier expertise without the commitment of full-time hires. This model allows businesses to access specialized skills tailored to their immediate needs, offering flexibility and cost-effectiveness.

A recent Forbes article highlights this trend, noting that “there has been an increased demand for fractional C-suite services which is powered by the affordability of these services.”

Like EIRs, the rise of fractional executive teams reflects a broader shift towards flexible leadership models, enabling companies to navigate complex challenges with agility and precision. While many institutional investors will expect and require full-time commitments from their management teams before writing large checks, many early-stage de-risking activities—as well as some later-stage activities which require only short-term commitments—can be accomplished using fractional executive teams.

Hiring top executive talent has always been a challenge for businesses, particularly in smaller markets or industries with niche requirements like biotech and healthcare. Companies in these regions often struggle to attract experienced leadership due to limited talent pools, high compensation demands, or geographical constraints. This gap in leadership can slow innovation, stall growth, and leave startups without the expertise needed to scale effectively.

Pittsburgh’s rich history of innovation, particularly in biotech, healthcare and technology has created a fertile ground for startups. However, the demand for experienced leadership often outpaces the local talent pool. Until that pool grows, approaches such as the EIR Program at Pitt or fractional executive teams are allowing efficient founders to fill critical leadership roles without the burden of full-time costs.

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Paulo Fontes, MD, FACS, is an accomplished transplant surgeon and entrepreneur who moved to Pittsburgh from São Paulo, Brazil, to work with leading experts in organ transplantation at UPMC. Dr. Fontes is the Chief Medical Officer of LyGenesis, a startup pioneering the development of cell therapies that use a patient’s lymph nodes to grow functioning ectopic organs. His focus has shifted from clinical practice to innovation, as he continues to mentor entrepreneurs in the life sciences and drive advancements in transplant medicine from his base in Pittsburgh.

Michael Hufford, PhD, is the Co-Founder and CEO of LyGenesis—a clinical-stage biotechnology company developing allogeneic cell therapies to enable organ regeneration. He has more than 20 years of experience obtaining FDA approvals and leading translational research, regulatory strategy and clinical development across biotech and pharma. Dr. Hufford’s philanthropic work includes co-founding Harm Reduction Therapeutics, a 501(c)(3) nonprofit pharmaceutical company that developed and commercialized RiVive®, a low-cost over-the-counter naloxone nasal spray to help prevent opioid overdose deaths.

Michael Schmanske is a 24-year Wall Street veteran with experience on trading desks and asset managers. He is the co-founder of Prognosis:Innovation as well as founder of MD.Capital.

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