
Theranos Secures $100M in New Funding from Fortress Capital - ourmandave
http://fortune.com/2017/12/23/theranos-secures-100-million-in-new-funding-from-fortress-capital/
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ukulele
For everyone saying Fortress are idiots: this is a loan and the amount is
conditional. That means 2 things:

1) If Theranos fails, Fortress can claim its assets.

2) The money is not released until certain milestones are met.

So either Theranos misses the milestones, folds, and has Fortress take over
its assets, OR Theranos meets the milestones and is actually a valuable
business.

Depending on the terms, Fortress could have easily structured this deal such
that they win in either scenario. I would imagine that Theranos was desperate
("distressed"), so the terms are likely pretty onerous.

~~~
mathattack
Fortress made a fortune in the MBS market. They aren't experts in biotech, but
they are very deep in asset backed loans. This isn't "Let's fund a unicorn"
situation, it's "Let's get an above market return on a loan where we can claim
assets in excess of principal if it goes belly up" situation. The real
question is "What are those assets?" but the investment wouldn't be made if
they weren't there.

~~~
unchocked
They've got that fly-ass building in Palo Alto, do they own it? Looks to be
worth close to $100M right there.

(Seeing a basically pre-revenue company build that thing was in retrospect a
good tip-off that it was a scam.)

~~~
mathattack
Naming stadiums and building fancy headquarters can be a tip-off. Look at
3com.

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CptFribble
I am astounded that anyone would touch Theranos with a 100-mile pole.

Their claims about their super-special tech were deliberately misleading,
taking advantage of the general public's lack of medlab knowledge. They never
released details of their "miracle" tech, and even if their claims were true,
Holmes' entire "vision" fundamentally misunderstood the lab business and the
way data and decisions flow from patient to doctor.

Maybe there's some savvy investing trick going on behind the scenes that I
don't understand, but as a former medical lab professional everything about
Theranos was giant red flags from the beginning.

~~~
hkmurakami
Perhaps their assets are north of $100m and this debt is senior to all equity.

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CalChris
Fortress is selling itself (trying at least) to SoftBank [1]. Their stock
price is down to 7.87 from 30.17 IPO [2]. Fortress _hasn 't_ been doing too
well. They've never done well.

[1]
[https://finance.yahoo.com/quote/FIG/](https://finance.yahoo.com/quote/FIG/)

[2]
[https://www.institutionalinvestor.com/article/b1505p66vq06cy...](https://www.institutionalinvestor.com/article/b1505p66vq06cy/the-
fall-of-fortress)

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jarym
We always assume these fund manager types are smart but history has shown
they're often as dumb as the average joe public.

A company with no product, casual relationship with the truth as far as its
technical capability goes, tarnished reputation and totally unqualified CEO is
worth $0

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kayhi
This is a pitch deck that I would love to see

We’ve had some set backs, but are really excited to show you...

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atonse
(“Famously inflated the capabilities of its devices”)

Didn’t they just flat out lie?

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alistproducer2
For certain people it appears the only way to fail is up.

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bhouston
Fortress is weird:
[https://en.wikipedia.org/wiki/Fortress_Investment_Group](https://en.wikipedia.org/wiki/Fortress_Investment_Group)

They have often bought distressed assets and also they did some weird things
with regards to the Vancouver Olympics.

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cinquemb
Great, we need to have more politically enabled companies like Theranos and
hope that they continue to thrive.

Hackers compromising their infrastructure from eastern europe/russia/china
based IP, and releasing the genetic information they have could provide a
great service to the public in the future.

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reiinakano
"Theranos, diagnose diseases with AI and Blockchain support"

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mythrwy
While the potential negative consequences for cheating fail to outweigh the
potential benefits of cheating (depending on who the person is of course)
cheating will continue to occur.

I'd like to think there was a time when stunts like Theranos pulled earlier
would have been career ending for the people involved but maybe that time
never existed. It does suck for everyone else though.

The implicit gain in scummy behavior is definitely a flaw in our system that
hopefully gets patched up at some point.

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solotronics
pivot to Theranos Blockchain Biotech and get the party started again

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corvallis
How is this company still operational? Do serious people believe that they
will have a functioning and profitable product in the future? Does Theranos
still have salaried employees, and if so, what are they working on? The
article mentions a "box that diagnoses diseases", which is a meaningless
description. They've gone from "running on fumes" to ...what, exactly? I'm
extremely puzzled.

~~~
creaghpatr
They have $200M of cash on hand according to the article. Not defending them
but you can do a lot with $200M including a full pivot and brand reboot.

~~~
corvallis
They pay rent on Page Mill Road and have multiple lawsuits pending, last I
heard, so I'm wondering how far that cash would actually take them. Also, if
Elizabeth Holmes insists on the same level of control without any biomedical
credentials, how realistic is a reboot? I would very much like to know the
reasoning that any funding providers would use to justify their support.

~~~
creaghpatr
I guess Fortress thinks they can get a return on the assets, whatever they
are. Could be a power play too, if you look at Theranos board there are a
surprising amount of political players which could be advantageous for the
SoftBank-owned Fortress.

Edit: looks like most of the original board members are gone post-scandal. But
for reference here’s who was on it previously
[http://fortune.com/2015/10/15/theranos-board-
leadership/](http://fortune.com/2015/10/15/theranos-board-leadership/)

~~~
corvallis
Investment groups that buy troubled assets are beyond my scope of
understanding, but is that what is happening here? It sounds like Theranos is
purporting to have a functioning product/business plan in the near future.

I work in medicine so my colleagues and I have been following this farce for
several years. When so many advancements and biomedical research can benefit
from such funding, why throw money at this fraudulent company?

Edit: Many thanks to users hkmurakami and ukulele above for
explanations/clarifications.

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Top19
Are you kidding me?

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hindsightbias
All they need to do is rebrand as Therablockchain or something.

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stevenj
Lol, thanks for the laugh. Merry Christmas.

