By Tanaya Macheel
Silicon Valley venture capitalist Tim Draper says he still stands by the disgraced founder of medical start-up Theranos, Elizabeth Holmes, despite her indictment on federal charges of defrauding investors and deceiving doctors and patients.
“I’ve always believed innocent until proven guilty,” Draper said in an interview with Cheddar. “Her mission was to change healthcare as we know it, to make it an easier system, and she was doing really good work… The attack came so soon, I believe she wasn’t prepared for it,” he added, referring to the investigation by the Wall Street Journal reporter John Carryrou, whose three years of reporting on Theranos formed the basis of his new book, "Bad Blood: Secrets and Lies in a Silicon Valley Startup."
Holmes stepped down as Theranos's CEO on Friday, June 15, the same day that the government filed fraud charges against her. The move marked another milestone in the stunning fall from grace of a young executive who promised to revolutionize health care an quickly built a company with a valuation that at one point stood at $9 billion.
In its indictment, the government charged Holmes and former Theranos COO and president Ramesh "Sunny" Balwani with multiple counts of wire fraud. Prosecutors said the two defrauded investors out of millions of dollars for faulty — and according to some reports, nonexistent — blood testing technology. They face potential sentences of 20 years in prison and fines of $250,000, plus restitution.
Draper, an early investor in Theranos, acknowledged that he's "written off" his stake in the company. But he likened Theranos’s downfall to the challenges met by disruptive companies like Napster, Uber, and Skype.
“Every really great company gets a major challenge from its competitors, the legal system, the government, or from the press,” he said. "Some companies survive those challenges and become great companies in the future, some companies are so burdened by those challenges that they are forced to sort of fail.”
Draper maintained that Holmes and Theranos transformed how the healthcare industry thinks of blood testing and that a handful of companies are using “Theranos-like technologies.” He said the medical industry will have a comparable testing device; it just may not come from Theranos.
He said he had no intention of letting the Theranos saga change his approach as an investor. "I hope I continue to back really great entrepreneurs with really great aspirational ideas," he said. "I still am looking for those changes that are going to cure cancer and help world hunger and gets us off the planet and get us flying around without a lot of energy in the planet."
Holmes, who is banned from leading any public companies over the next decade, is reportedly raising money for a new startup. Draper declined to comment on whether or not he would back it.
“I haven’t looked at it really,” he said. “We’ve moved on; we’re looking for whatever the next great thing is.”