We asked 3 VCs: would you invest in Elizabeth Holmes’ next startup? | E2353

VCs say seed investing requires tolerating ~1-2.5% fraud and treat pro rata rights as non-negotiable amid a live lawsuit over them.

• Seed fraud is normal: Sam Lessin says his fund runs roughly a 1-2.5% 'oops, it was fraud' rate across ~350 investments, comparing it to credit-card loss rates that funds should just budget for.
• Diligence scales with check size: Panelists agree a $25K-$50K seed check can't bear the diligence cost of a $100M round — Lessin says Theranos's error was treating $100M checks like Series C with Series A scrutiny.

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