South Florida Sun-Sentinel Palm Beach (Sunday)
South Florida can learn from Theranos
Experts give advice as area becomes hotbed for the startup culture
As the fallen startup wunderkind Elizabeth Holmes awaits her sentencing for defrauding investors in her failed blood testing company, Theranos, what does the verdict mean for venture capital investors in South Florida and elsewhere around the nation? Holmes’s story is startling.
She quit Stanford at 19, became a Silicon Valley executive and founded a blood-testing company that made unfulfilled promises of a technology that could revolutionize the industry.
The firm was buttressed by the support of private and public sector titans including computer mogul Larry Ellison, former President Bill Clinton and media baron Rupert Murdoch. Former U.S. Secretaries of State George Shultz a and Henry Kissinger sat on the Theranos board.
But in 2015, Shultz’s grandson, Tyler, a company employee, turned whistleblower and raised questions about the truth of Theranos’ claims and the Wall Street Journal launched an investigation.
Holmes was recently convicted in a California federal court of defrauding investors who sank millions into her company,
She faces a maximum sentence of 20 years in prison, a fine of $250,000, plus restitution, for the conspiracy count and each of three counts of wire fraud.
The fallout and South Florida
Post-verdict, commentators are divided on what the trial outcome means for the venture capital industry: Some insist the case was an exception rather than a sign of a flawed system that funnels billions into startups that seek to deliver new innovations to industries ranging from health care to transportation.
Others believe it is symptomatic of a financial space where investors easily can be taken by “fake it until they make it” operators who offer more hype than results.
Meanwhile, South Florida has become a hotbed for startup culture, as more entrepreneurs relocate to the region from the Northeast, California and elsewhere, fueling a growing movement for entrepreneurs who need financing, mentoring and other support that will increase their odds of success.
The South Florida Sun Sentinel