It is difficult nowadays to find funding for an early-stage company in the biomedical and biotech field. As speakers at the Annual Wharton Alumni Healthcare Conference on Oct. 22 explained, the rules of engagement between investors and entrepreneurs have changed since the financial crisis.

What used to drive investment was the potential for clinical success of an endeavor, said Andy Weisenfeld, WG’93, senior managing director of MTS Partners. Now, investors are more sophisticated and are forecasting beyond clinical trials to what the market could look like upon approval. They are also increasingly concerned about the costs of trials.

“The last five years have been years of tremendous change in levels of sophistication,” Weisenfeld said. “The bar is so much higher than it ever was before.”

“The idea of infinite capital is gone,” said Dr. Ali Behbahani, M’07, WG’07,principal at NEA.

Some investors might still consider an early-stage company if the investing is syndicated, according to Dr. Ash Khanna, WG’05, of SV Life Sciences. Corporate venture capital funds are also stepping up in this space.

The hot spots where seemingly everyone wants some of the action include any sort product where early trial data are very predictive of future success, such as medicines for auto-immune diseases or anti-virals, said Weisenfeld. Dr. Gary Kurtzman, a lecturer in Wharton’s Health Care Management Department, suggested that healthcare IT is hot, though it’s not clear if enterprises in this space will make money.

Another consideration for buyers and investors, according to the speakers of the “Financial Healthcare Innovations” session at the conference, is the makeup of the company’s board.

On the board, the norm is dysfunction, said Weisenfeld. It is getting better, he said, with investment synidcates and groups working together on a “much tighter” basis. And it’s not necessarily the board that is causing the dysfunction. Weisenfeld recalled at least three occasions in the past few years where management drained a company’s cash without advancing it.

“Once a board has to manage a company, that’s not a good situation,” said Kurtzman.