23andMe to Go Public, and You'll Never Guess Who's Backing It

The genetics startup, 23andMe, is teaming up with an unlikely partner to take the company public. The partner is British billionaire Richard Branson. 

Branson's Virgin Group recently launched a special purpose acquisition vehicle, or SPAC, called VG Acquisition. The first deal happens to be for 23andMe, which values the company at $3.5 billion, including debt. Before investors jump in, however, there are some key takeaways to understand about 23andMe's business.

For one, sales are falling. 23andMe and Ancestry both had to announce layoffs last year, as sales of kits have slowed from an initial surge. The company is also facing somewhat of a PR problem -- it was revealed last year that the FBI used consumer databases to help identify suspects in cold cases, and 60 Minutes ran a story just last weekend about genetic data being used to develop drugs and grow revenues in other ways. In other words, consumers are just waking up to the reality that their DNA is being used to grow a business, and they're not getting paid for it. 

Indeed, 23andMe sees its future as a drug developer and health care company, not as a pure genetic tester selling only kits for revenue. The company plans to leverage its existing and future customers to conduct research to treat ailments like diabetes, depression, and high cholesterol. Questions remain on how seamlessly 23andMe can transition its business, and investors should watch earnings carefully when the company goes public. In the meantime, investors can survey stocks that fall under the "genes" theme below.