When submitting a genetic test, one usually has a desired outcome in mind. That doesn’t mean the results will bear it out.

Investing in DNA testing startups is much the same. Over the years, startup investors have poured billions of dollars into companies in the space. To date, the results have delivered both huge successes and flops.

On the flop front, one of the more high-profile disappointments for investors has been genetic testing provider 23andMe. The company announced last week it will lay off around 40% of remaining staff and wind down its clinical trials.

The news follows years of declining stock market fortunes for Silicon Valley-based 23andMe, which is best known for test kits that offer people information about their ancestry and health risks. The company, which went public via SPAC in 2021 and raised over $1 billion in private funding, had a recent market cap of less than a 10th that sum.

Of course, one company’s travails aren’t cause for investors to flee an entire sector. And while 23andMe has struggled, other venture bets around genetic testing have fared better. This includes one of the earlier entrants — Natera — a provider of prenatal and other genetic tests that is currently a $21 billion public company.

Where VCs are investing now

More recently, venture investors have backed good-sized rounds for a number of startups focused on genetic testing. Using Crunchbase data, we made a list of seven such companies funded in the past three quarters.

The biggest funding recipient is BillionToOne, a Silicon Valley company developing technology to detect and measure tiny and sparse disease-related DNA fragments. The startup says its findings could enable vast improvements in prenatal screening and oncology testing.

Investors apparently like what they see. The 8-year-old company secured $130 million in Series D funding in June at a valuation of over $1 billion. It picked up another $140 million in debt financing in September.

The second-largest round went to Genome Medical, a startup that partners with healthcare providers to offer genetic counseling telehealth services. The South San Francisco-based company raised $75 million in fresh equity financing, per a September securities filing.

Another investor favorite is Legacy, a men’s fertility startup primarily focused on sperm testing and freezing that has raised $47 million to date. Its offerings include an option for semen analysis of sperm’s genetic health.

Revisiting the bubble

But while investors are still enthused about some companies tied to genetic testing, the shadow of excess from the bubble years still looms.

In addition to 23andMe, others who attempted exits in frothier market times have not done well. This includes Invitae, a provider of genetic diagnostics for hereditary disorders that filed for bankruptcy earlier this year and sold its assets to testing provider LabCorp. To a lesser extent, Personalis, a provider of cancer genomic tests, has also lagged following its 2019 IPO.

VC interest in pet genetics, once a sought-after startup niche, has also waned. Dog DNA testing company Embark, which raised $75 million in a 2021 SoftBank-led round, hasn’t secured funding since. Rival Basepaws, focused on cats and dogs, sold to animal health company Zoetis in 2022 for an undisclosed sum.

Growth market

On the bright side, however, more money is being spent on genetic testing than ever before.

Last year, genetic analysis constituted a $10.55 billion industry globally, per BioSpace research.

Its report predicts the number will grow to over $23 billion by 2033. If startups generate even a small percentage of this total, it could add up to some very large outcomes.

Related Cruchbase Pro list:

• Genetic Testing-Related Recently Funded Companies

Illustration: Li-Anne Dias