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A group member told me a patient-led class action lawsuit against Theranos is making an already skittish medtech investment community even less likely to fund medtech innovation.
“I’ve never heard of an investor getting sued for a portfolio company’s alleged misdeeds,” said John Viguerie, founder of diabetes start-up Glucorecs. “The premise we’re accustomed to limits an investor’s liability to loss of capital.”
He continued, “If a class action by patients or business partners is heard against Theranos, that also names investors, it could drop the temperature on an already tepid MedTech venture finance market which is already suffering a protracted IPO drought – there have been only 3 IPO’s in 2016 so far.”
Do you think the case will be heard?
If so, do you think John’s assertion, that medtech funds will become even scarcer, would materialize? Or do you believe even the threat of action against investors has already done the damage?
Related: The 10x talk on the Theranos 483 Warning Letters at http://bit.ly/Thera-nos
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Robert N. Blair
In Sickness and Wealth
I do think it impacts those investors who occasionally would invest in our sector. However, assuming one has proper value and a good syndicate, I don’t see much of an impact there either.
I just raised $45M and did not hear word one about it.
Chuck M Calvert, MBA
With these investors, it will probably come down to the age-old, “What did they know and when did they know it?” Investors are the owners of the company; they share responsibility, and it remains to be seen whether they were victims, perpetrators, or something in-between. Then I think it will be a question of whether circumstances support piercing the corporate veil.
Would love to have a lawyer chime in on this one.
Regarding the potential for future lawsuits, you haven’t seen anything yet. PFM and others are teeing up to sue Theranos and I would logically suspect another obvious target with much deeper pockets.
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