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Yeah, after you spend 18 months developing a product and then refund all your customers you should go to... wait, what?

In Lily's case, it seems there was potentially fraud occurring too.. If that's the case, I wouldn't mind seeing some jail sentences:

http://www.bizjournals.com/sanfrancisco/news/2017/02/01/dron...

Good thing for them going bankrupt isn't a crime.

They aren't just going bankrupt, they lied about what they had already developed while collecting the money (and are under investigation for that, and thus legal consequences could be happening).

I'd prefer that fate for Theranos

I agree. Defrauding investors isn't a "woops" sort of mistake.

They deliberately lied about what they had and sought to exploit the misconceptions their company perpetrated for personal gain.

If people who do this aren't sent to jail, isn't the system encouraging more people to try stuff like this?