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What investors learned from the Elizabeth Holmes trial: 'Zero'

Bloomberg1/4/2022 10:05 AM GMT+08  • 4 min read
What investors learned from the Elizabeth Holmes trial: 'Zero'
"I don't think a verdict is going to change the way founders and VCs work in the ecosystem."
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It took a jury seven full days to conclude that Theranos Inc. founder Elizabeth Holmes was guilty of four counts of fraud after a three-month trial. The startup world had been watching in suspense, but it was largely for the spectacle of it all -- not because anyone thought the verdict would significantly change behaviour in venture capital fundraising.

Holmes was convicted of defrauding investors in the blood-testing startup of hundreds of millions of dollars, which should spur investors to scrutinize their portfolio companies more carefully, especially in the specialized world of healthcare. And the guilty verdict suggests founders should beware of their optimism slipping into dishonest exaggeration. But in a red-hot startup investing market, no one’s willing to slow down.

“I don’t think a verdict is going to change the way founders and VCs work in the ecosystem,” said Angela Lee, who teaches venture capital at Columbia Business School and runs 37 Angels, an investment network that focuses on early-stage digital health companies. “It's about supply and demand, and there's a tremendous capital supply with the same number of awesome companies.”

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