CH Health Tech Advisory

10 December 2024 · 1 min read

A billion-dollar healthcare startup's dramatic fall, and a case-study for VC-founder tensions: Fo...

A lawsuit against VC firm Mohr Davidow Ventures over the collapse of billion-dollar healthcare startup HealthTap is a sobering case-study in the dark side of startup financing and the complex power dynamics between founders, employees, and investors. As an independent board member, I see these tensions regularly — and they'll only increase as 2021 valuations come back down to reality.

Last updated

6 May 2026

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A billion-dollar healthcare startup's dramatic fall, and a case-study for VC-founder tensions: Former HealthTap employees are suing VC firm Mohr Davidow Ventures (MDV) in a case that highlights the dark side of startup financing.

The lawsuit alleges MDV orchestrated a systematic devaluation of HealthTap through:

  • Deliberately abandoning profitable enterprise contracts
  • Manufacturing artificial liquidity crises
  • Converting notes to preferred stock at allegedly manipulated valuations
  • Blocking external funding opportunities

The result? A reported 99% drop in valuation and MDV emerging as the majority shareholder.

This case serves as a sobering reminder of the complex power dynamics between founders, employees, and investors in the startup ecosystem.

As an independent board member I see these tensions at play on a regular basis. We'll see more of these tensions emerge after the crazy 2021 valuations are now coming down back to reality. This is a sobering reminder for startup founders that you really need to pick your investors wisely (if you have the luxury of being able to choose).

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