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Healthtech

Theranos

Shut down · 2018

Blood-testing startup that claimed its devices could run hundreds of lab tests from a few drops of finger-pricked blood — technology that never actually worked as marketed.

Palo Alto, USA2003–2018

Key metrics

$945M

Total funding

$9B

Peak valuation

800 people

Team at peak

3

Funding rounds

Outcome

Shut down

Operations ended in 2018.

Dissolved out of court in September 2018; remaining patents were assigned to creditor Fortress Investment Group in lieu of $65 million owed, not a traditional acquisition.

2018

Financial trajectory

Funding by round

$602.7M$401.8M$200.9M$0$6.9M2004Early funding$400M2013Growth funding ...$538.1M2015Late-stage fund...

The Story

Founded

Early funding

$6.9M

Growth funding (cumulative through 2013)

$400M

Late-stage funding

$538.1M

Shut down

What worked

  1. 01

    Whatever else it was, Theranos was an extraordinary fundraising and narrative-building operation.

  2. 02

    Investor traction

    Which lent the company a legitimacy that deflected scrutiny for over a decade, and she personally sustained comparisons to Steve Jobs in the press that helped pull in nearly a billion dollars from some of the most sophisticated investors and family offices in the country.

What didn't work

  1. 01

    Founder leverage narrowed

    Its proprietary "Edison" devices could reliably run only a small fraction of the tests the company marketed, so for the large majority of the 200-plus tests it offered, patient samples were secretly diluted and run on modified commercial lab machines instead.

  2. 02

    That gap between the pitch and the technology was hidden behind extreme internal secrecy and a board with no medical-diagnostics expertise, until a 2015 Wall Street Journal investigation and internal whistleblowers exposed it — triggering regulatory sanctions

  3. 03

    The loss of its Walgreens retail partnership, SEC fraud charges, and ultimately a criminal conviction of its founder.

Fraud / Ethics Violation

THE VENTURE TRAIL TAKE

Theranos is a different category of failure from most startups in this database

it did not fail because the market rejected a real product, or because unit economics didn't work, or because a competitor out-executed it.

Read the full postmortem

Company details

Business model
B2B2C
Founded
2003
Headquarters
Palo Alto, USA
Team at peak
800 people
Funding rounds
3
Investors
Rupert Murdoch · Betsy DeVos family · Walton family (Walmart) · Cox family · Partner Fund Management · Carlos Slim
Peak valuation
$9B

Founders

Elizabeth Holmes
Founder & CEO; Stanford chemical engineering dropout, age 19 at founding, no prior industry or clinical-lab experience
Ramesh "Sunny" Balwani
President & COO from 2009; former Lucent and Commerce One executive, also Holmes's undisclosed romantic partner during his tenure

Sources

  1. 01CNN BusinessThe rise and fall of Elizabeth Holmes: A timeline
  2. 02Fierce BiotechWho lost cash in Theranos? DeVos, Murdoch and the Walmart heirs
  3. 03MedCity NewsReport: Theranos to dissolve
  4. 04U.S. Department of JusticeElizabeth Holmes Sentenced To More Than 11 Years
  5. 05BioPharma DiveDownfall of a unicorn: How Theranos fell apart

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