I'm consistently surprised at the low bar for due diligence in startup funding. In my personal experience, it goes something like "send us a business plan, pitch deck, three customers (that you handpick) for us to talk to, the legal paperwork, and maybe some bank records but not usually". I always assumed investors required credentials to Google Analytics or Mixpanel or iTunes analytics or whatever to actually verify that the usage numbers are what founders say they are, yet I've never had an investor do that or even heard of it being done. It's completely baffling to me that Theranos can raise ~$700M w/o any third party testing or diligence.

This article suggest it's because Holmes is "enthralling" and investors had an "exaggerated faith in the power of medical testing". Faith and charisma are very abstract concepts, but data and testing aren't, so why rely on the former instead of the latter? As Deming said, "In God we trust; all others must bring data."