The Theranos scandal has rocked Silicon Valley. Once considered a visionary billionaire, Elizabeth Holmes is now facing up to 20 years in prison for numerous charges of fraud and false representation. This may be the final nail in the coffin that changes how startups are funded and what type of entrepreneur Silicon Valley will back moving forward.
Who Is Elizabeth Holmes?
Elizabeth Holmes is one of the most famous names in the Silicon Valley. She attended the University of Stanford and dropped out at a young age to launch her company Theranos. The goal was simple: create a technology that would make blood testing much more efficient for doctors and patients alike. In 2003 she registered as a medical device manufacturer and by 2004 raised $25 million from venture capitalists. By 2014 their valuation reached $50 billion dollars making Elizabeth Holmes youngest self-made billionaire ever on paper before it all came crashing down in 2018.
How Did It All Fall Apart?
The hype around Theranos began building back in 2013 when a journalist at the Wall Street Journal was contacted by an anonymous source who claimed Theranos’ testing machines were faulty and inaccurate. The company had been receiving FDA approval to use their proprietary Edison technology that they claimed would revolutionize blood tests through finger pricks instead of venous draws from arm’s veins, but it wasn’t living up to expectations. In 2015 a report was published which started unraveling the whole story behind Theranos and made other publications follow suit in uncovering what was going on inside this bleeding edge Silicon Valley startup.
The Bad Blood behind Elizabeth Holmes Fraud Charges
In 2018 federal prosecutors charged Elizabeth Holmes for wire fraud due to her claims about how effective and revolutionary her inventions were. Since then she has been indicted on multiple charges, including counts for wire fraud and conspiracy to commit wire fraud, with each charge carrying up to several years in prison if convicted.
The Theranos scandal may have changed how Silicon Valley views entrepreneurship moving forward due their cult following but this isn’t stopping big hitters from backing other emerging companies such as Uber’s founder Travis Kalanick who is raising another fund despite being forced out by investors after his bad behavior made headlines and other ultra-rich businessmen who are still investing big time in the silicon valley instead of doubling down because of the different scandals that are being exposed with time.