When submitting a genetic test, you often have a desired result in mind. However, this does not mean that the results will confirm it.
Investing in DNA testing startups is very similar. Over the years, startup investors have pumped billions of dollars into space-based firms. The results so far have brought each enormous successes and failures.
One of the more high-profile disappointments for investors during the flop was a genetic testing provider 23 and Me. Last week, the company announced it might lay off roughly 40% of its remaining staff and end clinical trials.
The news follows years of stock declines for Silicon Valley company 23andMe, which is best known for test kits that provide people with information about their backgrounds and health risks. The company, which went public via SPAC in 2021 and raised greater than $1 billion in private financing, recently had a market capitalization of just below tenth of that sum.
Of course, the problems of one company are not a reason for investors from the entire sector to flee. And while 23andMe has struggled, other genetic testing ventures have fared higher. This includes one of the previous participants – Natera — a provider of prenatal and other genetic testing that is now a $21 billion public company.
Where are VC funds currently investing?
Recently, enterprise investors have backed large rounds for a variety of startups focused on genetic testing. Using Crunchbase datawe have compiled a list of seven such firms that have been funded in the last three quarters.
The largest recipient of funds is A billion against onea Silicon Valley company developing technology for detecting and measuring tiny and rare DNA fragments associated with diseases. The startup says its findings could enable significant improvements in prenatal screening and oncology research.
Investors clearly like what they see. The eight-year-old company secured $130 million in Series D financing in June at a valuation of greater than $1 billion. In September, it raised one other $140 million in debt financing.
The second biggest round has begun Genome medicinea startup that partners with healthcare providers to supply telehealth genetic counseling services. In September, the South San Francisco-based company raised $75 million in recent equity financing deposit of securities.
Another investor favorite is Heritagea male fertility startup focused primarily on sperm testing and freezing that has raised $47 million to this point. Its offering includes a semen option evaluation genetic health of sperm.
Back to the bubble
While investors remain enthusiastic about some genetic testing firms, there is still a hint of excess from the bubble years.
In addition to 23andMe, other entities that attempted to exit the market during frothier times didn’t fare well. This covers it Invitea provider of genetic diagnostic services for inherited diseases, which filed for bankruptcy earlier this 12 months and sold its assets to the testing provider LabCorp. To a lesser extent, Personalcancer genomic testing provider also lags behind after going public in 2019.
VC interest in pet genetics, once a sought-after startup area of interest, has also waned. An organization that deals with dog DNA testing Startwhich raised $75 million in 2021 SoftBankthe lead-led round has since did not secure funding. Compete Basepawsfocused on cats and dogs, sold to an animal health company Zoetis in 2022 for an undisclosed amount.
Growth market
On the other hand, more cash is being spent on genetic testing than ever before.
Last 12 months, genetic evaluation was a $10.55 billion industry worldwide Biospace tests.
Her report predicts that number will grow to greater than $23 billion by 2033. If startups generate even a small percentage of this amount, it might probably result in very large results.