Biotech investors are being a little more careful in light of the recent Theranos fiasco, Wired reports.
In a short while, Theranos went from being valued at $9 billion to closing its doors and being barred from owning or operating a clinical lab. A series of articles at the Wall Street Journal cast doubt on the ability of the company's technology to conduct medical tests on a finger-prick's worth of blood, as the company claimed, and regulators uncovered a number of alarming conditions at its labs.
Wired says that biotech investors at a recent meeting still seemed "stunned" about the turn of events, but also appeared to be avoiding making the same mistake in the future. Venture capitalists, it says, are asking to see data first.
"We haven't done a single financing round without having to show data on our assay," says Gabe Otte, the CEO and co-founder of diagnostic firm Freenome. "That's largely been because of Theranos. They were able to raise hundreds of millions of dollars without showing data."
The Theranos situation highlighted a flaw in the VC system, Wired adds, as investors weren't skeptical, despite the lack of data. "If due diligence wasn't the norm at venture capital companies, maybe now it will be — if there's a return on that investment," it adds.