Theranos Ban A Reminder That Unicorns Aren’t Bulletproof by Mikey Tom, PitchBook

Blood-testing startup Theranos has been dealt another blow by regulators, perhaps signifying the last nail in the troubled company’s coffin.

Late Thursday night, U.S. federal health officials banned Elizabeth Holmes, the company’s CEO, from operating blood-testing facilities for two years, the culmination of a months-long investigation into a business once valued at $9 billion.

A breakthrough investigation by The Wall Street Journal in October called into question the company’s technology and marketing claims, postulating that both were overstated. At the time the accusations seemed somewhat outlandish, but as time went by, more and more problems at Theranos were uncovered.

Theranos Unicorns

This ongoing saga has sent shockwaves through the startup industry for the better part of a year, reminding founders and investors alike that private market valuations—and the unicorns they create—aren’t bulletproof. With all the news of giant fundraisings and large valuation jumps, it’s easy to forget that a lot of these companies are still figuring out their places in their respective industries.

Theranos is far from the only high-flying startup to fall upon troubled times. Fab, Gilt and One Kings Lane come to mind: All were either sold or acquired for far less than their final private-market valuation. Fisker and Better Place are other examples where the hype didn’t live up to long-term value creation.

As the startup industry heads into a winter, keep an eye out for other similar stories. A prolonged chilly fundraising environment will reveal which unicorns deserve their horns and which are just sporting temporary party hats.