23andMe is Going Public Via a SPAC Backed by Richard Branson
Home DNA testing company 23andMe has decided to go public via special purpose acquisition company (SPAC). The move is backed by Virgin Group founder Richard Branson. The deal values the company at $3.5 billion, and current shareholders will own 81 percent of the company.
Wojcicki and Branson each invested $25 million themselves as part of the $250 million fund formed to take the company public. The deal is expected to close in the second quarter, at which time the company will begin trading on the New York Stock Exchange under the ticker symbol ME.
23andMe CEO and co-founder Anne Wojcicki said in a statement, “We have always believed that healthcare needs to be driven by the consumer, and we have a huge opportunity to help personalize the entire experience at scale, allowing individuals to be more proactive about their health and wellness.”
23andMe sells saliva kits people can use at home to determine their genetic ancestry and their chances of developing certain diseases. The company has an estimated 10 million customers in its database and says more than 80 percent of customers agree to participate in medical research.
SPACs, which grew in popularity in 2020, are formed by groups of investors with the intent of acquiring a company. Also known as a “blank-check” company, a SPAC is seen as a less-risky option than the traditional IPO, and it gives newer companies access to late-stage company amounts of capital.
Wojcicki said that the funds will let the company expand into developing therapeutics, seen as a more lucrative market than consumer DNA testing. A slide deck announcing the deal showed the company sees big growth potential in the therapeutics market.
Some blame the downturn in the popularity of DNA home testing on privacy concerns, including reports that the FBI had used genetic results from consumer DNA companies’ databases to solve cold case crimes. 23andMe and other firms have promised not to share customers’ data without consent.
Wojcicki acknowledged a slowdown in the DNA home-testing market. “We have always seen health as a much bigger opportunity” than DNA ancestry, she told the WSJ. Branson, an early investor in 23andMe said, “there is no better money to invest than in health care.”