A Closer Look At Theranos’ Big-Name Investors, Partners And Board As Elizabeth Holmes’ Criminal Trial Begins

Theranos was once a Silicon Valley golden child, expanding rapidly, partnering with a major pharmacy, and raising over a billion dollars in funding.

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But all of that came crashing down after a series of explosive reports, starting in 2015, by The Wall Street Journal reporter John Carreyrou, who called into question the efficacy of Theranos’ technology. The company claimed its technology could run blood tests with just a prick of a finger, but it was later revealed that Theranos used traditional blood testing machines for the majority of its tests, and that its own technology could produce inaccurate test results.

Now, founder Elizabeth Holmes is on trial.

There are already plenty of books, movies and podcasts about the Theranos saga, so we’re not going to rehash too much of the drama that led to the company’s downfall. Instead, as jury selection continues for Holmes’ trial, we’re taking a look at the investment dollars the company netted, the high-profile partnerships it formed, and the big names that backed and advised Theranos before the company went from a Silicon Valley star to a cautionary tale.

Before Holmes and her ex-boyfriend, Theranos’ former president and COO Ramesh “Sunny” Balwani, were indicted, the company was the subject of civil and criminal investigations, and settled with the U.S. Securities and Exchange Commission. Palo Alto-based Theranos was officially dissolved in 2018.

Without denying or admitting to the charges, Holmes separately settled with the SEC, agreeing to pay a $500,000 penalty.

Holmes and Balwani each face two counts of conspiracy to commit wire fraud and 10 counts of wire fraud. Federal prosecutors allege that the pair defrauded investors by lying about the accuracy of Theranos’ tests and technology, and defrauded patients by providing tests that weren’t as accurate as advertised.

The pair have both pleaded not guilty to the charges. 

Balwani’s trial is expected to begin next year. Holmes is expected to claim as part of her defense that he abused her emotionally and psychologically. 

Here’s a closer look at Theranos’ investors and other business ties.

Theranos’ investors

Theranos raised about $1.3 billion in funding ($1.4 billion including debt financing) over the course of its history, per Crunchbase data. Theranos first raised money with a $500,000 seed round led by Draper Fisher Jurvetson (now called Threshold) in June 2004, according to Crunchbase.

Some of the most high-profile investors in the company include:

• Media mogul Rupert Murdoch, who led a $5.8 million Series A in February 2005;
• Venture capitalist and Draper Fisher Jurvetson partner Tim Draper, who remained an outspoken defender of Theranos at least until 2018;
• Oracle Executive Chairman and founder Larry Ellison; and
• National pharmacy and retail chain Walgreens.

Following Murdoch’s investment, Theranos raised a $9.1 million Series B funding round led by ATA Ventures and a $28.5 million Series C, both in 2006. Theranos then raised $45 million in venture funding in July 2010. 

Among the large VC and private equity firms to invest in the company were Partner Fund Management and Fortress Investment Group, which led Theranos’ last financing event, a $100 million debt financing in December 2017, before the blood-testing company shut down. 

Theranos’ partnerships

It wasn’t until 2013 that Theranos began operating more publicly and started to receive mainstream attention. The company raised $50 million from pharmacy giant Walgreens, which began a relationship with the startup back in 2010, according to The Wall Street Journal. Eventually, there were more than 40 Theranos testing centers in Walgreens stores.

Walgreens, Theranos’ most high-profile partner, later sued the testing startup after reports questioning the validity of its tests came out, alleging a breach of contract. Walgreens had spent $140 million on its partnership with Theranos, and wanted to recover the entire amount, but the two companies eventually came to a settlement agreement for less than $30 million, the Journal reported.

Over the course of its history, Theranos also formed partnerships with the Cleveland Clinic and became AmeriHealth Caritas and Capital BlueCross’ labwork provider in Pennsylvania.

Theranos’ board of directors

Part of what made Theranos such a big name in Silicon Valley was the people the company brought on for its board of directors. The company had notable figures from the worlds of both business and government as members of its board. 

They included: 

• Henry Kissinger (former United States Secretary of State);
• Jim Mattis (retired Marine Corps four-star general);
• George Shultz (former United States Secretary of State);
• Richard Kovacevich (former CEO of Wells Fargo);
• William Perry (former United States Secretary of Defense); and
• William Foege (former director of the Centers for Disease Control and Prevention).

Holmes’ and Balwani’s respective trials are expected to be the last chapter of the Theranos story which has been unfolding over the past six years. Each wire fraud charge has a maximum sentence of 20 years in prison, in addition to potential fines and restitution, per the Journal. 

Startups fail all the time, but it’s not often they end up with multiple trials and a cautionary tale.

Photo: Theranos founder Elizabeth Holmes departs the San Jose federal courthouse on February 10, 2020 [photo by Marlize van Romburgh]