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| Type | Bachelor's Thesis |
| Scope | Discipline-based scholarship |
| Title | Reviewing and assessing incentives in Venture Capital Investments in Health technology: the case of Theranos |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 34 |
| Date | 2022 |
| Abstract Text | In an ever more open and globalized world economy with unprecedented access to vast and increasing flows of information driven by the digital revolution of the 1990’s, competition has spiked between market players fighting for scarce resources. This is particularly the case of financing economic ventures. Investors require higher returns from their investments pressuring ventures in need for capital to promise spectacular earnings that are yet to be met. This situation on one hand pushes for innovation, but, at the same time, exposes the economy to greater uncertainty and risk, leading to a dangerous inflation of the financed projects’ potential. Furthermore, funding from traditional business lenders, such as banks and credit unions, usually requires a lengthy and complex vetting procedures and requirements that is complex for start-ups and young-stage ventures to meet when apply for funding. The need to address demand for funding from the growing number of start-ups and ventures has created a market for alternative forms of investments that are flourishing and aim to streamline the processes of application, approval, collateral, control, and repayment. The increased number of start-ups, characterized by huge expansion potential, spirit of innovation, high dynamism and government and university backing, has greatly incentivized a shift in financing methods. At the same time, the advent of these alternative forms of investments, characterized by less stringent requirements and controls and by a tendency to grant loans to riskier potentially more profitable ventures, has led in some cases to unsustainable promises that resulted in disastrous outcomes. In this context, we will focus on the health technology sector, that is highly promising and growing, but also subject to the frontier of controversial ethical and societal dilemmas. Although the potential benefits of health technologies are huge, they raise deep societal, ethical and moral questions and significant challenges regarding privacy rights and obligations to patients. To ground the discussion and provide a practical perspective, we will analyze the recent fiasco of Elizabeth Holmes’ Theranos. We will try to identify and understand the factors that led the 2 company, advertised as a breakthrough in health technology, to fraud and significant value loss. |
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