lessons from a $9B fraud

Looks great on paper

Hola,

Now that the Theranos story has been the subject of documentaries and a podcast (and soon a movie), the world at large is buzzing about Elizabeth Holmes. Her $9B+ company endangered lives with its flawed and overhyped blood-testing tech.

But if one were to judge simply by patent grants, Holmes is a legit inventor of medical device tech.

There’s a tension between the legal/bureaucratic world of intellectual property and the real world of science and business. 

The patent system should definitely encourage innovation and outside-the-box creative thinking (for example the brilliant work of Katie Bouman, the grad student who created the algorithm that helped capture the first-ever image of a black hole, featured in TWID below). 

But when we found a flurry of patents granted to Holmes (as a first or second inventor) this month using our patent analytics platform, we still thought it was notable. 

I’ve heard some VC investors minimize the value of startup patents while others consider it a major plus as part of a defensible technology moat. This is a healthy debate to have in light of the Theranos story.

Got money

The European tech boom is diffusing beyond the established hotbeds like Berlin, Stockholm, and London. Nearly $55B has been invested across 7,200+ equity deals to tech startups across the continent since 2012.

We identify the most well-funded VC-backed tech startups in each country in Europe based on disclosed equity funding. See them all here.

You made the cut

Last year, $81B was invested into VC-backed startups in Asia across more than 5,000 deals. That’s an increase of almost 12x in funding to Asia-based startups since 2013.

We teamed up with The New York Times for the fourth year in a row to develop a data-driven ranking of the world’s best venture capital partners. Here are the top 20 partners in Asia.

 Vroom vroom

As wireless tech advances, connected cars are evolving and becoming more capable. Startups are developing sensors, computer vision, and mixed reality to make cars smarter, safer, and more efficient.

From diagnostics to driver monitoring to cybersecurity, we map out 60+ companies driving innovation in the connected car space. Expert Intelligence clients can see them all here.

Take a look at me now

Visual search is gaining popularity with brands and retailers, and has become a hot topic on earnings calls.

We take a look at how companies are using it and where it could go next. Check it out here.

 Deals on deals

Sequoia Capital China has participated in 140+ deals totaling over $30B since the beginning of last year. Founder and managing partner Neil Shen took the #1 spot on the NYT and CBI’s list of the top 100 venture capitalists.

We take a look at where the VC is placing its bets. Clients can read about it here.

Have a great rest of the week.

Marcelo
@ballve

P.S. Are you passionate about fintech? Want to join the CB Insights team? We’re hiring an associate fintech analyst.

This week in data:

• -$14.3B: Uber filed its S-1 today. According to the company, Uber reached more than 10 billion trips in 2018, up from 5 billion a year prior, to hit $11.3B in revenue (up 42% over the same period). However, the company also spent $14.3B in total 2018 costs. Uber has never been profitable, and per its S-1, it may never be: “We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability.” For a closer look at how the company operates, check out our report on how Uber makes money. 

  

• 50: Facebook is reportedly introducing its own cryptocurrency, which will allow WhatsApp users to send money to each other instantly. The tech giant has 50 engineers dedicated to the project and will roll out its product in the first half of 2019, according to the NYT. We previously dove into Facebook’s blockchain strategy, from a timeline of major events in Facebook’s blockchain activities to an analysis of relevant patents. Read all about it here.

  

• 2: Two new companies joined the unicorn club this week. India-based online fantasy sports platform Dream11 was valued at up to $1.5B as part of a secondary market transaction. Meanwhile homeowners and renters insurance provider Lemonade reached $2B following a $300M Series D from Allianz X, Google Ventures, and SoftBank Group, among others. (The startup was last valued at $500M in December 2017.)
   
• 11 pages: Cloud-based HR platform Rippling recently raised a $45M Series A — without a pitch deck. Instead, the company used what CEO Parker Conrad calls a “pitch memo,” essentially a more detailed overview of the company and its strategy that’s meant to be read rather than viewed as a slideshow. The 11-page memo was accompanied by visuals in 46 slides. If you still love the deck format, we rounded up the early pitch decks of 15 startups before they became unicorns. Check them out here.

  

• 5: Hulu announced this week that SNL star Kate McKinnon will star as Elizabeth Holmes in its new miniseries about the rise and fall of fraudulent blood testing company Theranos. In other Elizabeth Holmes news, the former CEO of the now-defunct company has been granted 5 patents this year, including a patent for a sonicator, a device that uses sound/vibration to agitate particles in a sample in order to identify them. The patent describes identifying pathogens in a blood sample as a potential use case. See all 5 of the patents here.

  

• 8 telescopes: This week, scientists captured the first-ever photo of a black hole. The black hole is 55 million light-years away from Earth, in a massive galaxy called Messier 87, and has a mass 6.5 billion times that of our sun. To take the photo, more than 200 researchers involved in Event Horizon Telescope Collaboration used 8 giant radio telescopes around the world, from Hawaii to the South Pole. The image was made possible by a crucial algorithm created by 29-year-old grad student Katie Bouman.
• 5,200+: More than 5,200 Amazon employees signed a letter to Jeff Bezos and the Amazon Board of Directors this week, urging company leadership to take action on climate change. Among other charges, the letter requests a complete transition away from fossil fuels, as well as public goals and timelines consistent with the Intergovernmental Panel on Climate Change report (which says emissions must be cut in half by 2030). We dig deep into the company’s strategy in our Amazon Strategy Teardown.

  

• 37¢: Blue jeans giant Levi Strauss & Co released its first earnings report since the company went public in March — and so far, so good. The company reported earnings per share at 37 cents on revenue of $1.4B (up 7% from the previous quarter). Levi Strauss’ success in notable against the backdrop of the so-called retail apocalypse. We rounded up 68 major retail bankruptcies since 2015 and explained why they failed. Check it out.
• 2,339: In case you’ve been living under a rock, Season 8 of Game of Thrones premieres this weekend. Last season, the premiere drew over 10 million viewers. To help viewers prepare for the final season, WaPo developed this illustrated guide to all 2,339 deaths in the series.