SAN FRANCISCO - Every time George Milstein walks into a room, somebody approaches him to ask if he can open a window.

"At first I thought it was a personal hygiene thing," Milstein joked Wednesday at the Palace Hotel in San Francisco.

But now he knows. The biotech community is looking toward financial analysts like Milstein, a senior managing director at San Francisco-based Pacific Growth Equities Inc., for some sort of crystal ball that can accurately predict an upturn in the public markets. An open window, in turn, would help the private biotech companies raise capital, as investors would increasingly trust their dollars to bring them returns.

Milstein served as the panel chair of "Private Financing in Challenging Times," the plenary session at the Biotechnology Industry Organization's second annual BIO VentureForum 2002 conference, which ended Wednesday.

To reiterate what most of the 500 attendees already knew, times are not good for biotech companies needing money, Milstein said. As of March 31, about 60 biotech companies had one year or less of cash. And more than 10 percent of the biotech sector is trading at or below cash levels, he said.

"Our advice very strongly is you can't build your companies only looking at an [initial public offering] strategy," he said. "It's just not realistic."

While some analysts predict that the window probably won't open until 2004, they all agree that it's hard to tell for sure. And companies should not wait on an uncertainty when the need for cash is now.

Biotech company executives have expressed concerns about dilution and about losing control over their companies to venture capitalists who don't truly care about the product. But these companies need to start worrying about their next meal, said Chris Ehrlich, a senior associate with InterWest Partners in Menlo Park, Calif.

"Take the money! Take the money! Take the money!" he encouraged entrepreneurs, echoing a theme that ran throughout the two-day conference that said it is better to own a percentage of something successful than 100 percent of something that can't get off the ground.

"Dilution is not the worst thing in the world," Milstein said. "Running out of money is the worst thing in the world."

A lot of companies are looking too far forward, Ehrlich said. They are looking for IPOs or profitability to keep them going. They need to be looking at their next milestone, he said.

Ehrlich suggested biotech companies take advantage of in-licensing opportunities for augmenting pipelines. Building critical mass is important, he said, suggesting that companies integrate their capabilities through mergers and acquisitions.

In the meantime, venture capitalists are looking for companies with fantastic managers, stellar scientific founders and strong intellectual property, said Dan Janney, managing director of San Francisco-based Alta Partners. A company that has all three would be a dream for a venture capitalist.

"It just doesn't happen very often," Janney said.

Venture capitalists, however, may be attracted to a company's intellectual property, but they want to bring in more experienced management as a condition of the investment.

Robert Blum, senior vice president of finance and corporate development and chief financial officer of South San Francisco-based CytoKinetics Inc., said he steers clear of investors who are looking only for deep discounts; he's looking more for people who are genuinely interested in his business. And good management is not the only factor in making a company with strong intellectual property successful, he said.

"You've got hundreds of people who are working, trying to make this vision happen," Blum said.

Having a personal relationship and good communication with employees, as well as investors, is crucial to success, he said.

Prior to Wednesday's plenary session, Mark Heesen, president of the National Venture Capital Association in Arlington, Va., gave a glimpse as to why venture capitalists might be requiring seasoned management as a prerequisite to an investment. The year 2002 will be the first year ever in which venture capitalists have a negative backflow, meaning that more of them will have returned money than raised money this year.

"The venture capital industry is not doing terribly well," Heesen said.

In the second quarter of 2002, however, 27 percent of all venture investing went into life sciences companies. Biotech companies took 17 percent of the money that quarter.

A total of $1.2 billion was invested by venture capitalists in biotech companies during the first half of 2002.

"Venture capitalists, when they decide to invest, are giving larger chunks of dollars," Heesen said.