This sounds right. Theranos is a case example - if the investors had hired any independent experts in the technology sector, micro-fluidics for biochemical analysis, they'd have immediately told them that quantitative measurements (i.e. getting blood metabolite levels) at that scale were essentially impossible, although +/- testing (i.e. detection of a virus, or a gene sequence) was more plausible.

Restricting Theranos to +/- testing (STDs and other infectious diseases, maybe some cancer genes) would be FAR less profitable than taking over the blood testing industry, which is probably why Theranos didn't go in that direction. Regardless, even cursory due diligence would have revealed all that.