PitchBook News - What's the moral of the Theranos story?

Plus: A heat map of VC investment in Europe, IPO predictions for 2022, carbon-negative tech draws investor interest & more
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The Weekend Pitch
January 9, 2022
Presented by Supervest
(David Odisho/Getty Images)
Elizabeth Holmes is guilty of fraud. That refreshingly simple fact wraps up years of misrepresentations and lies that caused a $9 billion valuation and around $1 billion of invested capital to vanish.

On charges of deceiving investors, Holmes was convicted on four counts, and jurors were deadlocked on another three. She was acquitted on all four counts of defrauding patients.

The moral of the story is less clear. Tech's critics see the trial as a reproach of the "fake it 'til you make it" startup culture. Meanwhile, Silicon Valley's defenders argue Theranos was never part of its club. Likewise, the saga was both a condemnation and vindication of the tech media, which first inflated Theranos' hype before dismantling it through investigative journalism.

The jury's decision comes during heady times for venture capital, which is an open invitation for the Holmeses of the world. This week, the tech world reflected on another record-shattering year—$329.8 billion in US venture capital investment was raised in 2021, nearly double the previous year. There's arguably never been a better time to be a huckster in VC.

I'm James Thorne, and this is The Weekend Pitch. You can reach me at james.thorne@pitchbook.com or @jamescthorne on Twitter.
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Quote/Unquote

"I still believe in what she was trying to do, and if this scrutiny happened to every entrepreneur as they tried to make this world a better place, we would have no automobile, no smartphone, no antibiotics, and no automation, and our world would be less for it."

Tim Draper, founder of Theranos investor Draper Fisher Jurvetson, on the Elizabeth Holmes verdict

Deal Flow

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European and Israeli startups had raised €100.4 billion (about $114 billion) across 9,419 deals as of Dec. 20, up 115% and 6%, respectively, from 2020, according to PitchBook data.

The UK, home to the region's most developed VC market, led the pack with several mega-deals in the fintech sector, including fundraises by challenger banks Revolut and Monzo.

Check out our heat map for more details on how VC investment broke down across various European countries in 2021.

Datapoints

After a standout year for public listings, there are still plenty of reasons to believe that IPO activity will continue to be strong in 2022.

Nearly 700 US VC-backed companies are valued at more than $630.8 million, the median exit value of a 2021 public listing, according to PitchBook data.

While that leaves the market with plenty of potential candidates, rising interest rates, declining sentiment for SPACs and underwhelming IPO stock performances could dampen the momentum.
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Did you know ...

(Richard Drury/Getty Images)
… That climate models now show that decarbonizing society alone will not be sufficient in reducing emissions to limit global warming to 1.5 degrees Celsius, and that "negative emissions" will be required to close the emission gap?

PitchBook analysts predict that carbon-negative technologies, especially direct air capture, represent a long-term mega-trend that will drive significant VC investment in 2022.

Our recent Emerging Technology Outlook also details other predictions across 11 sectors within emerging tech, including agtech, AI & machine learning, climate tech and information security. Check it out here.

Recommended reads

How a Texas population of coyote-like canids with a ghostlike genetic legacy could hold the key to reviving the highly endangered red wolf. [The New York Times]

Nearly two years into the pandemic, workers are putting in more hours than ever, leading to anxiety, stress and burnout. Could a paid sabbatical be the antidote? [The Wall Street Journal]

The lessons and controversies of Ryszard Kapuscinski, Poland's most famous journalist. [Financial Times]

Inside the new patient-centered design that's making hospital stays more comfortable and less scary. [Wired]

More than 300 years ago, a Spanish ship sank in a deadly battle against the English, taking down billions in treasure. Why nations are again warring about who gets to claim the gold and the glory. [Vanity Fair]

The wild, wonderful, fragile world of estate sales. [The New Yorker]
This edition of The Weekend Pitch was written by James Thorne and Priyamvada Mathur. It was edited by Alexander Davis, Angela Sams and Sam Steele.

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