Since researchers announced that the Human Genome Project had finished a high-quality sequence of the human genome in 2003, venture capital investors have backed a number of companies in the field of genomics providing services ranging from DNA laser printing to personal genetic testing. But ten years later, is genomics still hot among investors or has the promise of the space never really materialized for the VC community?
Over the last year, the genomics space has seen close to $473M in venture capital financing across 46 deals. In spite of the IPOs of genomics companies including Complete Genomics (since acquired by the Beijing Genomics Institute) and Pacific Biosciences, YoY deal growth essentially flattened. While YoY funding growth has seen a 25% uptick, two companies, CardioDx (backed by Intel Capital and Kleiner Perkins) and Google Ventures-backed Foundation Medicine received more than 2/3 of the $147M invested in Q3’12.
Genomics companies are generally a capital intensive endeavor which may be one reason for relatively tepid deal growth. As an example, Nanostring Technologies, which filed to go public earlier this month has raised over $100M from investors including Draper Fisher Jurvetson and OVP Venture Partners, while Kleiner Perkins-backed Pacific Biosciences had taken in well over $300M in funding before its 2010 IPO.
The genomics industry appears to be maturing with mid to late stage funding (Series B+) now taking over 55% of total deal activity. Google Ventures, for example, has participated in Series B or later rounds of three genomics companies; DNAnexus, Foundation Medicine and 23andMe.
Geographically, deal activity for genomics companies is concentrated heavily in California with nearly 39% of deals in the last two years. Of the deals in So Cal, almost all went to companies located in the Greater San Diego area which is regarded as a life sciences hub. Companies located in the hub include BioNano Genomics and DFJ-backed Synthetic Genomics. About 16% of deals in the genomics space go to Massachusetts, while the Pac-NW took close to 9% of all deals.
