More than 300 investors held tight to their money clips and browsed the Palace Hotel in San Francisco last week, shopping for a share in biotechnology's best and brightest companies.

A total of 130 private companies gave 10-minute pitches hoping to attract the investors to their innovative therapies and cutting-edge technologies.

"There are plenty of deep pockets," said Sam Bhaumik, a senior vice president and managing director at Comerica Bank. "But there are short arms."

Bhaumik, who heads the Northern California Technology and Life Sciences Division of Comerica in Menlo Park, Calif., spoke as part of a panel discussion at the Biotechnology Industry Organization's VentureForum conference, which will be held next year in Philadelphia. The conference provided a place where entrepreneurs could share their stories and get exposure before investors. It also provided a place where lenders like Bhaumik, as well as venture capitalists, could share their financing advice for young companies. Many entrepreneurs have found themselves with good science, but without the network needed to raise funds. And with a discouraging financing environment, the opportunity to gather advice and meet with investors was a welcome change for many of them.

Bhaumik participated in the standing-room only workshop titled "Financing Strategies For Private Biotech Firms." The workshop moderator, Barry Brust, a partner in the corporate securities and finance practice of Hogan & Hartson LLP in Los Angeles, flashed slides that listed various myths about financing, one reading: "If you have a medical/scientific breakthrough, funding is a sure thing."

Panel members shook their heads and expressed the fact that who you know is sometimes more important than what you have. Getting funding can take a minimum of 90 to 120 days, Bhaumik said, explaining that the hands on those short entrepreneur arms have trouble reaching the bottom of those deep investor pockets.

"Bigger ideas with proven management teams are what are getting funded today in this tough market," said Scott Morrison, a partner focused on life sciences in the California offices of Ernst & Young.

Assuming the FDA becomes more efficiently run under Bush nominee Mark McClellan, investors may be more eager to jump into new biotech companies. Too many products and their potential returns have been on hold by a 10,000-person agency that has run without a commissioner for a few years, Morrison said.

Private companies can't count on the public market window to open anytime soon, analysts said at the conference - it could be late 2003 or even 2004 before that happens. Company officials also should not worry so much about dilution, said Bill Roberts, a partner in the corporate securities and finance practice at Hogan & Hartson's Boulder, Colo., office.

Roberts said, "I always say, Wouldn't you rather own a percentage of something growing fast than a hundred percent of something that's going nowhere?'"

"You should just take the dollars," Bhaumik agreed. "Some companies aren't around today because they played the dilution game."

Joel Marcus, CEO of Alexandria Real Estate Equities Inc. in Pasadena, Calif., warned entrepreneurs to be wary of investors who want to gain control of companies at an early stage. A Series A financing, he said, should be done in a traditional way, rather than with one investor who might plan to take over the company.

At the opening of the VentureForum conference, BIO President Carl Feldbaum said product approvals are the key to attracting mainstream investors, and he believes McClellan is well prepared to tackle the challenges that are slowing the drug approval process. Biotech companies also should feel the financial effects of McClellan's leadership.

"According to a new Tufts study," Feldbaum said, "shaving development and review time by a third would lower average cost per approved new drug by $167 million.

"Perhaps even more importantly, reducing development and review delays gets medicines to patients and physicians faster."

Of the 130 companies that presented their stories before investors at the BioVenture conference, 42 percent of them were California based. A total of 23 other states also were represented at the conference, Feldbaum said.

Giving a brief synopsis of where the industry stands post-Sept. 11, Feldbaum said the industry was well capitalized following the terrorist attacks. While other sectors slumped, the Nasdaq Biotech Index jumped 22 percent.

But the news was not so good for biotechnology after the emergence of corporate scandals and allegations of insider trading.

"ImClone [Systems Inc.] and the Martha Stewart factor whacked us," he said. "More significantly, clinical setbacks this year have exacted a heavy toll on valuations of both private and publicly traded companies, dragging down valuations across the board."

At a lunchtime talk, however, Robert Tijan, Howard Hughes professor of biochemistry and molecular biology at the University of California at Berkeley and a founder of Tularik Inc., lifted spirits with his comments on where the science is going.

"From my perspective, the science is absolutely fantastic, so I would encourage you to hang in there because things are going to get better," he said.

Feldbaum also said there is reason to believe things are looking up for the biotech industry. In the last few weeks, Gilead Sciences Inc. received FDA approval for a breakthrough treatment in hepatitis B, and Amylin Pharmaceuticals Inc. secured a $435 million deal with Eli Lilly and Co. for the diabetes drug AC2993.

"I don't want to overplay this, but these are real comeback stories signifying what I believe are true long-term trends in the biotech industry," Feldbaum said.

In the last few weeks - and for the first time in months - two large follow-on offerings were completed, with Trimeris Inc. raising $109 million and Telik Inc. raising about $74 million.

"These are encouraging signs, but the vast majority of biotechnology companies are still feeling the crunch," Feldbaum said. "But what's important to remember, as troubling as the current situation is, is that biotechnology has endured financial troughs before and this industry has grown right through them."