Spiral Genetics, the Seattle-based maker of software that helps crunch big volumes of DNA data, has just raised its first sizable round of venture capital.
Spiral is announcing today it has raised $3 million in its Series A financing from DFJ, the high-profile venture firm formerly known as Draper Fisher Jurvetson. Spiral has now raised about $3.7 million through a combination of venture capital and angel investment since its founding in 2009.
The money will be used to help Spiral seize the opportunity it sees in helping biologists deal with their information overload problem. While researchers rave about their ability to sequence an organism’s entire genome on an Illumina instrument in a day, many of those scientists get bogged down for several days afterward just trying to get the data in good enough shape to do more in-depth analysis. Spiral’s offerings are supposed to take care of those basic data clean-up tasks in the matter of a few hours, leaving scientists more time to think about the really high-value problems, like how to interpret the data to advance our understanding of science, and for clinical purposes. One such company interested in enabling easier clinical interpretation of genomic data—Emeryville, CA-based Omicia—is announcing today it has chosen to partner with Spiral to handle basic data analysis.
Spiral has eight employees now, and plans to use the investment to double in size, adding software developers and salespeople, says co-founder and CEO Adina Mangubat. Rachel Pike, a senior associate at DFJ who vetted the Spiral investment, will be joining the company’s board.
“It means a lot to us,” Mangubat says. “When you start out in a company, you know the chances of getting to this point, statistically for any company, are pretty low. To make it to this milestone is a very significant event for me and the Spiral team. It says a lot about the company and the speed with which this industry is growing.”
Spiral, which I profiled here in November 2011, has an unusual history. It was started by Mangubat and Becky Drees after they met in an entrepreneurship class at the University of Washington’s Bothell campus. They won a business plan competition together, and then started thinking more seriously about a real startup, and what it might do. After toying with a consumer-genetics company idea, they settled on what they saw as a big emerging problem—basic data analysis for genomics researchers. Mangubat and Drees found Jeremy Bruestle to help with developing the necessary algorithms for their software, and off they went.
The problem is pretty simple. A single human genome has 6 billion DNA data points which today’s state-of-the-art instruments seek to put in their proper sequence. When the raw data, usually from an Illumina machine, comes off the instrument, it needs to be properly aligned with a reference genome to make sure that valid comparisons can be made from one genome to the next. The chemistry used in the machines makes some errors, which need to be corrected. And the variants in the newly sequenced genome need to be detected and flagged.
Many of those tasks can be performed with open-source software programs, but they aren’t the kind of analyses that the average biologist can do on their laptop. Spiral, which first started commercializing its software in the fall of 2011, set out to bundle these programs together in one place and support them with distributed computing power and cloud computing server power from Amazon Web Services. Spiral now offers its customers its software service either through a pay-as-you-go option on Amazon Web Services, or through an annual license to heavy-duty bioinformatics customers who prefer to keep their DNA data on their own server clusters.
When Illumina rolled out its newest HiSeq 2500 sequencing machine in November, which makes it possible to get a genome in a day for $3,000 to $4,000, Mangubat says she knew the stars were aligning properly for Spiral.
“We bet the entire beginnings of the company on the idea there would be genome-in-a-day sequencers, and there’d be a strong need for software that could keep up with the machines,” she says.
The size of the market opportunity for this kind of bioinformatics is still anybody’s guess. People have been bemoaning the trend of genomic information overload for years, and yet many bioinformatics companies have struggled to get customers to pay for software. Many customers thought they could get by with open-source programs, and old-school Microsoft Excel spreadsheets.
DFJ’s Pike said in a statement the development of fast/cheap DNA sequencing has led to “an explosion of data” which creates an opportunity for companies like Spiral. “These developments are only accelerating and will have real and lasting implications on drug development, R&D in agriculture, and biological production of chemicals and fuels,” Pike said. “Spiral Genetics is a solution that will both manage and draw insight from these data, enabling the industry to keep up with constantly-accelerating technological progress.”
Spiral also has its competitors, of course. Mountain View, CA-based DNAnexus, Cambridge, MA-based Knome, and Cambridge, MA-based Seven Bridges Genomics are a few companies that also have some basic analysis offerings.
While some of those companies specialize in just human genomes, Spiral is designing its software to crunch through basic analysis of genomes from humans, animals, and even some of the more complex genomes found in plants. Spiral sees some of its future growth potential in the agricultural sector, where its competitors don’t appear to be as focused, Mangubat says. Spiral also believes it has an edge in providing faster turnaround times for basic analysis.
Mangubat wouldn’t say how many new customers Spiral has added in the last year, or how much its revenues have increased. One of the key pieces of feedback the company has gotten from the field, however, is that it helps customers quickly get their data in a standard format that is primed for deeper analysis, like which gene, or set of genes, might be out of whack and causing a disease.
“Some of the feedback we’ve gotten, the reason our platform is helpful, it provides a nice standardized way for people to produce data reliably, and consistently,” Mangubat says. “One of the problems is that the tools for analysis are only as good as the data you put in. If researchers come to them without well-analyzed data, you’ve got a ‘garbage-in, garbage-out’ problem.”
The financing is just the latest big event in what’s been a busy year for Mangubat. She made the Forbes 30-under-30 list in December, and then turned 26 in January. The Forbes feature raised her profile significantly, introduced her to several other impressive young entrepreneurs, and has helped open a few more doors of possibility for Spiral. But she doesn’t sound like the attention is getting to her head. Spiral isn’t yet profitable, and she knows there’s no guarantee it will ever get to that point of sustainability.
“This market is pretty hard to predict for, because it changes so rapidly. It’s possible we could achieve profitability through this [financing] round. But there’s a strong chance we’ll raise another round, because of growth needs of the company. If the market continues to grow, it could be really exciting.” But she adds: “My hopes and the reality of the situation may or may not line up.”
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