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What Do Pitching and Investing Look Like In a Post-Elizabeth Holmes and Theranos World?

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31.05.2019

At its height in 2015, blood-testing startup Theranos was valued at $9 billion and its founder, the then 31-year-old Elizabeth Holmes had a net worth of $4.5 billion. She was the youngest woman to become a self-made billionaire. She was held up as a Silicon Valley wunderkind.

The only problem was that it was all a lie.

Holmes launched her biotech company on the promise that her device could conduct a wide range of medical tests on just one drop of blood. She started it as a 19-year-old Stanford drop out, and as the company grew, it partnered with Walgreens and Safeway, raising $700 million from investors that included the Walton family and Rupert Murdoch. The company’s had two former senators, two former secretaries of defense and two former secretaries of state on its board, including Henry Kissinger. The company had FDA approval.

And by the end of 2018, it had all unraveled. Holmes had left her post as CEO, been charged with federal criminal wire fraud, paid a $500,000 fine to the SEC, and officially shut down the company.

By now, the story of Elizabeth Holmes and Theranos’ rise and fall isn’t just infamous, it’s ubiquitous. All the details of the case have been comprehensively chronicled by Wall Street Journal reporter John Carreyrou, who first broke the story, in his book "Bad Blood: Secrets and Lies in a Silicon Valley Startup,” an HBO documentary series called The Inventor and a podcast called The Dropout. And now Hollywood is taking a crack at the story, with a Hulu series starring SNL’s Kate McKinnon and a feature film with Jennifer Lawrence currently in the works.

While Theranos is an extreme example of hubris and deception in Silicon Valley, it has had a ripple effect, leading to conversations around the importance of more thoroughly examining the efficacy of up and coming businesses at the intersection of health and tech. And there are some lingering questions. How do you protect your intellectual property and while still leading with transparency? What does real, accountable due diligence look like?

Alison Darcy and Nisha Dua are an entrepreneur and venture capitalist respectively who have grappled with these questions from both sides of the table.

Dealing with data after Theranos

Darcy is the CEO and founder of Woebot, a company that is the maker of an AI chatbot therapist that helps users manage their mental health. She comes to entrepreneurship from academia and medicine.........

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