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.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
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