Max Nisen, Columnist

Theranos and the Problem With Booming Biotech Funding

The disgraced blood-testing firm is an outlier, but points to broader excesses that could still hurt investors.

March 15, 2018 at 5:27 PM UTC

Max Nisen is a healthcare analyst at Bloomberg Intelligence. He previously wrote for Bloomberg Opinion, Quartz and Business Insider.

Elizabeth Holmes, founder and CEO of Theranos Inc., left, speaks during a Bloomberg Television interview in San Francisco on Oct. 6, 2015.
Photographer: David Paul Morris

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Theranos has been a big embarrassment for the world of private health-care investment. It deepened on Wednesday, when the SEC detailed what it called "massive fraud" committed by the company, its CEO Elizabeth Holmes and former President Ramesh Balwani.

You might think Theranos's very public collapse, which began in late 2015, might have cooled private investment in new biotechnology firms1521133996793. Far from it. Private biotechs raised nearly $9 billion last year, a record, and have already raised nearly $3 billion in just the first two months of 2018, according to data from Pitchbook, which tracks such deals.