I heard from a friend who is fairly prominent in the microfluidics space (doing lab work with much smaller amounts of material than ordinarily required) that initially it was a drug delivery company. Delivering compounds in a reliable time released way is challenging and valuable, and I think their initial foray was in that direction. Apparently it didn't work well early on and they pivoted in this direction, so maybe the VCs were not expert in the space post pivot.

More likely I think they were also enamored with what looked like promising results. I've personally seen situations where technical due diligence on lab tech was poorly done and therefore wrong. Unless the VC has a fairly strong science background/scientific advisors in a related sector, it's super easy to make something look like it's working when it's actually totally busted.