Theranos: a lesson for technology investors

5th January 2022

Reading the news over the last couple of days on the demise of Theranos and the conviction of Elizabeth Holmes on four counts of fraud, I’m left with the question of why did it ever get to this stage?  (

Extraordinary claims in science require extraordinary evidence, especially in highly regulated fields such as medical technologies.  It strikes me that the investors, whilst understandably being aggrieved at being misled, need to take some responsibility for the situation; why did they not ask more questions, investigate the failure of some of the early commercial contracts, or seek more independent review of the technology they were investing into?  Did they fail to differentiate between the company’s ambitions and actual performance?

We cannot expect investors to be expert in all the fundamentals required to make a great scale-up business (technology, business model, marketing, people, manufacturing/operations, etc), they need to ask questions and seek independent opinions.  This must be done in a supportive fashion, helping the company to build its reputation and capability rather than acting as a bureaucratic or administrative drag.

At the end of the day, I suspect this case will soon be forgotten… inventors will continue to dream big and investors will continue to take risks – we need this for the entrepreneurial eco-system to thrive.  The lesson for me here is for investors to constantly challenge and ask questions, seeking independent and multiple opinions at every step of the journey; the answers found will quickly expose problems and encourage the development of solutions that will ultimately make their investment stronger.

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