What inspired the creation of Illumina Ventures Labs, and what needs were you aiming to address?

“Illumina Ventures has invested at the seed stage with several companies in our portfolio. These companies have actually achieved significantly higher valuations over time, so it's been successful. This prompted us as partners to think about how we can look for a more systematic way to invest in seed and pre-seed stage companies. At that same time, Illumina Inc, was actually looking to transition its accelerator to an entity which could help early-stage companies network with the VC community and navigate future financings.

So, we brought it under the umbrella of Illumina Ventures and rebranded it as Illumina Ventures Labs. The specific needs of the community we were aiming to address were: #1, providing startups who were performing significant amounts of sequencing a means to obtain the necessary reagents without having to burn a lot of their precious cash reserves. And #2, providing a mix of technical commercialization and fundraising expertise that a lot of these very talented but young entrepreneurs did not have access to on a regular basis.”

What role does Illumina Ventures Labs have in Illumina Ventures Fund 3?

“Illumina Ventures Labs provides a very unique source of deal flow to Fund 3. It focuses on early-stage companies, and by working closely with the Labs companies, we at Illumina Ventures will be effectively performing hands-on due diligence for about two years, and thus we'll be able to make some very, very informed decisions when it comes time to decide if we are going to invest in the company’s series A. And furthermore, because we're leveraging our in-kind contribution in these early-stage companies via the Illumina Ventures Labs mechanisms, we are enriching for companies doing a lot of sequencing and generating very, very large data sets, which really underscores our core focus on Fund 3.”

What criteria does the team use when selecting seed stage companies to invest in, and what qualities do you look for in founders?

“First and foremost, we look at the quality and the background of the team. Are they a top tier, top-notch team? Are they credible, are they articulate, and are they receptive to feedback? Because we really want to be able to help shape the strategy, help work with these entrepreneurs, - we really want to make sure we can have a good dialogue with them.

Secondly, can we at Illumina Ventures, through our cash plus in-kind contribution, secure a meaningful equity position in that seed round?

Third, is the valuation for this company appropriate for the stage of the company and for what they've accomplished? We have seen many cases where valuations may be a little bit higher than they should be for various reasons, and we know that that can create sometimes some challenges in future financing rounds. And we want to make sure that the valuation they have reflects the value inflection points and what they've accomplished so far.

Fourth, what is the unmet need and size of the market? This is really, really important for us. We really want to understand, are they playing for a large space here where there's a significant value to be created?

Fifth, do they have a differentiated intellectual property protected technology? And lastly, if there are existing investors, and that's not always the case, but if there are existing investors, we'd like to talk to those existing investors, hear from them directly what their comments and perspectives are on the team, on the company, on the opportunity, and what else do they have to say about the space and risks and benefits of investing?”

Illumina Ventures Labs has physical labs and office space in the San Francisco Bay Area and the UK. Are the companies you consider for Illumina Ventures Labs required to be near those locations?

“When we conceived of Illumina Ventures Labs, our goal was to access innovation and work with talented entrepreneurs throughout the globe. We realized that to enable this strategy and this philosophy, that in addition to our physical labs in Foster City, California and Cambridge, UK, we needed to have virtual and hybrid operating models where companies could reside anywhere in the world or come to our labs on an infrequent basis. In fact, most of our companies, if you look at them in our Illumina Ventures Labs portfolio, are either virtual or hybrid, and in fact, we've invested in companies in Chicago, in the Boston area and even in Stockholm, Sweden.”

Seed stage companies have different needs than more established companies. What support do you provide beyond capital?

“First of all, this has been an incredibly enjoyable and productive learning experience, both for the companies and for us, all of us who are working with the Illumina Ventures Labs companies. Those companies have commented that our regular monthly meetings, that we have with them as part of our in-kind contribution, are among the best meetings that they have and very informative for them.

At Illumina Ventures Labs we also find these meetings to be engaging and productive for us as well, and in fact, we all act as one team, the company and Illumina Ventures Labs. If you didn't know who is in what teams, you would just look in the conference rooms and say, ‘This is just all one team.’ We really enjoy acting as one unified team.

In these meetings, we discuss a variety of topics, new results, strategy and financing, and even corporate development in the sense of what other partnering or corporate initiatives should you be undertaking? So, we've realized that an important aspect of what we provide at Illumina Ventures, beyond the capital, is actually this guidance and mentorship. These are incredibly smart and dedicated entrepreneurs, but we are able at Illumina Ventures to provide significant value. In some cases, we've helped to steer the team to the right decisions or the right use of resources, which at this pre-seed and seed stage, is incredibly important because one or two wrong decisions or bad use of resources can really create some really large challenges down the road.”

Could you share some insights about the companies currently in the Illumina Ventures Lab’s portfolio and what makes them stand out?

“We are excited about all the companies in the Illumina Ventures Labs. We have invested across therapeutics, tools and diagnostics. I'll talk about the therapeutics portfolio first.

We have five companies in this space. The furthest along is Integrated Biosciences. They combine synthetic biology, artificial intelligence, and novel chemical libraries to address the integrated stress response, which can be used in a variety of diseases such as neurology, immunology, and cancer. They already have one partnership and are looking to expand that to many others. And we have four other companies that are a little earlier stage, so I'll talk about them in aggregate. They incorporate hyperscale biology, which is another word we use for massively parallel biological approaches, machine learning for target and molecule discovery, as well as discovery of combination therapies or for programmable cell differentiation from iPSCs, which are induced pluripotent stem cells. So that's our therapeutics portfolio, and I think what we're seeing here is a lot of really exciting early stage differentiated companies that are tackling a wide variety of disease areas.

On the tool's portfolio, we have one really exciting tools company based in Sweden, Stockholm. They're doing three-dimensional spatial biology. We also have one tools company that is actually physically based in our Cambridge UK Labs, Tagomics. They're focusing on looking at unmethylated regions of the genome and developing multi-omic assays that can be used for a wide variety of applications, whether it's early cancer detection, whether it's toxicity detection, or many other research purposes. So that's our tools portfolio, and again, these are highly differentiated technologies, both Tagomics and Cubase, which is based in Stockholm. Both of these companies are already garnering significant interest and partnerships, even at this seed stage, which is, I will say, quite remarkable. You don't see a lot of seed stage companies getting as much interest as they have, so that's really exciting and really shows the potential of these companies.

And then lastly, in the diagnostics portfolio, I think we have three also very exciting companies. One is in the liquid biopsy space in multiple myeloma, so this is a company based in Boston, a spin out of Dana-Farber Cancer Institute. We have a second company that's also doing liquid biopsy. These are some founders who came out of Grail, which many of you may know was involved in early cancer detection and specifically machine learning on circling tumor DNA that's methylated. These guys are taking a lot of that core expertise and applying it to what's called MASH, which is a metabolic dysfunction-associated steatohepatitis, which with the obesity epidemic, is increasingly problematic and highly prevalent, not only in the US but also in the world. And the challenge is having a non-invasive test that can actually identify those people and channel them for the appropriate treatments, which are now being approved by the FDA in MASH.

And a third one in diagnostics that's using three-dimensional genomics for the detection of rare cancer fusions that are missed by a variety of technologies so far in standard of care. And so, what we're focusing on in these three diagnostics companies are really diagnostics that will transform patient management and save lives. This is not your commodity type diagnostics, but these are really cutting edge, really transformative diagnostics. I'm really excited about these companies.

In conclusion, how would you summarize the relationship between Illumina Ventures Labs and the development of these early-stage companies?

“I would say is that we're really seeing a lot of excitement here at the intersection between genomics and next-gen sequencing, artificial intelligence, and what we call hyperscale biology. A lot of the Illumina Ventures Labs companies are really at the tip of the spear, if you will, really at that intersection, and we think it's going to be a great harbinger for what's to come for Fund 3. We're really excited about what Fund 3 has in store for us, and really, what the future holds for these 10 companies that are in Illumina Ventures Labs.”