Elizabeth Holmes has targeted ultra-wealthy families as early backers of Theranos Inc to avoid potential pressure from big investment firms to go public, according to a family office DeVos investor who has contributed $100 million ( 85.7 million) for blood tests Begin.
Lisa Peterson, who helped manage the DeVos family fortune at RDV Corp, testified at Ms Holmes’ criminal fraud trial on Tuesday that the soft-spoken entrepreneur wooed the family with bulky investment binders, private conversations, an extensive company tour in Palo Alto, CA, and a personalized on-site blood draw.
The DeVos family, whose patriarch was a billionaire industrialist, lent their support to Theranos in 2014, by which time Theranos was one of Silicon Valley’s hottest companies and Ms. Holmes was on magazine covers.
“She was selecting five or six private families to invest in her business,” Ms Peterson told jurors in federal court in San Jose, California. “She was inviting us to be part of this opportunity,” she said, adding that the company is forecasting 2015 revenue of nearly $1 billion. “They wanted to get to know us as much as we wanted to do due diligence on them.”
The testimony offered insight into how Ms Holmes pitched her idea to a handful of the world’s wealthiest people. Other families include Rupert Murdoch, Riley P. Bechtel and Alice Walton, heiress to the Walmart Inc. fortune.
Ms Peterson also described how her skepticism of Ms Holmes evolved when Theranos was besieged by media and regulatory scrutiny in 2015 and 2016.
Jurors were shown two TV clips, the first of CNBC’s Mad Money in which Ms Holmes reacts to the Wall Street Journal’s first report in 2015 that found inaccuracies in Theranos blood tests. A segment on NBC’s “Today” show a year and a half later features Holmes responding to the startup’s takedown sparked by the Journal’s reports and regulatory review.
In Ms Holmes’ interview today with Maria Shriver, jurors learned for the first time how high and how fast the entrepreneur has risen – and how far she has fallen. They saw and heard Ms Holmes describe herself as ‘devastated’ by regulatory violations that ultimately saw her banned from running a lab business for two years and forced Theranos to withdraw or correct test results. tens of thousands of medical tests.
Ms Peterson said she confronted Ms Holmes during a conversation in April 2016.
The Theranos founder said the most damaging story was from a reporter who wanted to win a Pulitzer Prize, Ms Peterson said. “We asked: ‘Is it true or is it not true?’ and she downplayed it,” Ms Peterson said.
During cross-examination, Ms Peterson had a testy exchange with Lance Wade, a lawyer representing Ms Holmes. The lawyer asked Ms Peterson if anyone had interfered with her due diligence on Theranos and interfered with a “full and accurate understanding of how the business operated at the time”.
MsPeterson admitted that MsHolmes had a strong influence and admitted to being “afraid” of missing out if she passed up a chance to invest in the startup. Probing the company’s business partnership with Walgreens too deeply could mean “we wouldn’t be invited to invest again,” she said. But Ms Peterson also resisted Wade’s insinuation that she hadn’t done her homework on Theranos.
“We got responses that we were happy with and that were different from the ones that came out later,” she said. “We relied on what we were told.
Ms Holmes faces up to 20 years in prison if convicted of deceiving investors and patients. –Bloomberg