Illumina Ventures aims to make a difference

A healthcare investor in the San Francisco Bay Area has its eyes on investments in cutting-edge genomics. The firm says its focus is rewarding and meaningful.

From early cancer detection from a few drops of blood to correcting gene mutations, genomics has the potential to revolutionize human health.

Some better-known venture investments in the relatively new field include 10xGenomics, 23andMe, Foundation Medicine, GRAIL and Natera. And with rapid scientific advances, more are on the horizon.

As many genomics applications sit at the intersection of tech and healthcare, investors in these companies usually comprise traditional tech and life science venture capitalists.

But one firm focused solely on early-stage genomics companies is Illumina Ventures, a Foster City, California fund whose anchor LP is the gene-sequencing giant Illumina.

Timely deals

Illumina Ventures was founded in 2016 by Nicholas Naclerio, formerly a senior vice-president of corporate strategy and business development with Illumina. His ex-employer saw strategic value in novel genomics and agreed to not only invest $100 million in the firm’s maiden fund, but it also lent the otherwise independent firm its name.

Illumina Ventures closed a $230 million fund in 2017, with an additional $130 million from university endowments, sovereign wealth funds and other corporations, says Naclerio.

“In the first fund we led half the deals, especially those in the tools and diagnostics space,” Naclerio says.

VC Nick Naclerio Illumina Ventures
Nick Naclerio, Illumina Ventures

The latest notable investment is LetsGetChecked. In May, the firm co-led with HLM Venture Partners a $71 million Series C round into the at-home health testing company.

“We started looking into LetsGetChecked before covid-19,”  Naclerio says. “We liked that they have both B2B and B2C solutions and we were thinking ‘would it not be interesting to combine it with some of our existing diagnostics companies?’”

And then covid-19 hit, and LetsGetChecked became very timely.

It offers coronavirus testing, but it can also diagnose many other conditions. “It is a remote diagnostics company and covid-19 provided a jump start to everything that has to do with telehealth.”

Illumina Ventures, which has three partners in addition to Naclerio, invests primarily in Series A and Series B companies, writing checks from $5 million to $10 million. But it has also backed a couple of seed rounds with $500,000 checks.

“I am not seeing a huge change in valuations overall. Biotech has been least affected by covid-19, probably because it is essential.”

The firm invested in 18 companies from its first fund and realized one exit, Twist Bioscience, valued at $350 million at its November 2018 initial public offering. Twist Bioscience was originally backed by Illumina before the firm’s launch, Naclerio says.

Illumina Ventures recently had a first close on Fund II, but the firm would not provide details about the fund.

“Valuations in the space are a little less frothy now, but I am not seeing a huge change in valuations overall. Biotech has been least affected by covid-19, probably because it is essential.”

Spotlight on genomics

The firm continues to be busy having conversations with entrepreneurs it met before the pandemic, but it is not meeting with new companies.

More notable is that the pandemic “shined a light on genomics,” Naclerio says, and that scientists determined the genetic composition of the virus within weeks, leading to fast development and clinical trials of potential vaccines.

“These are all positives for our industry. It is going to result in more infectious disease investments like our investment in Serlmmune,” he says. The firm led the serology company’s $8 million seed deal in 2017.

Since the start of the pandemic, Serlmmune is now applying its platform solely to the development of covid-19 diagnostics, vaccines and therapeutics. “Healthcare is a rewarding and meaningful area to be investing in,” Naclerio says.