Despite Lingering FDA Issues, 23andMe Raises $115 Million Series E on $1.1 Billion Valuation


23andMe finalizes its Series E funding round, which closed out at $115 million. The round was led by Fidelity Management & Research Company, with support from new investors Casdin Capital, WuXi Healthcare Ventures, and Xfund, as well as returning investors Illumina, New Enterprise Associates, MPM Capital, and Google Ventures. The consumer genetics testing company has been fundraising all summer, announcing in June that it had secured $80 million of a planned $150 million Series E round. While the company did not hit its $150 million target, the fresh capital couldn’t come at a better time for 23andMe as regulatory issues force it to pivot its business plan nearly 10 years after its launch.

In 2006, 23andMe launched with the goal of providing consumers direct access to tests that could explain their unique genetic makeup and the health conditions that variances would make them more susceptible to. This followed an era of explosive DNA discoveries that included the strong link between BRCA1 and BRCA2 genetic mutations and risk for ovarian or breast cancer in 1994, and the completion of the Human Genome Project in 2003. Then a small startup run by Anne Wojcicki, the now ex-wife of Google founder Sergey Brin, 23andMe hoped to capitalize on this research by offering DNA sequencing and risk profiles to the general public. That goal carried 23andMe through its first seven years of growth until in 2013, backed by a $60 million Series D, the company began a national advertising campaign that drew the attention of the FDA. 23andMe received what amounted to a cease and desist letter, informing it that if it continued marketing genetic health information to consumers without FDA approval, it would be breaking the law. Wojcicki was in the middle of a divorce, and her Washington DC director of regulatory affairs had just quit.

Since that time, 23andMe has raised no outside capital. Investors were understandably leery about its future. Wojcicki was forced to use the remaining Series D funding to completely pivot and re-establish her then seven-year-old startup. Now, two years later, 23andMe seems to have a business plan in place that has assured both new and existing investors that the path forward is promising. 23andMe has shifted its focus from selling genetic tests that explain health risks to selling genetic tests that explain genealogical information, or where a person’s ancestors were from. This adjustment is allowing 23andMe to continue bringing in new customers, while at the same time the genetic material being sent in is being tested for a wide variety of health-related mutations. That information is not shared with the consumer, rather, it is saved in a massive genetic database that 23andMe is using to help drug researchers discover new potential therapies. That revenue stream, drug discovery, is 23andMe’s future and how it lured investors back to the table.

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