23andMe, a consumer genetics pioneer that revolutionised the DNA testing industry, has filed for Chapter 11 bankruptcy protection after years of financial struggles and growing competition. The Silicon Valley company saw its valuation plummet from a $6 billion peak following its 2021 SPAC merger to just $50 million by early 2025, with shares trading in penny stock territory below $1.
Founders and vision: A strong start
23andMe was co-founded by Anne Wojcicki, Linda Avey, and Paul Cusenza in 2006 to democratise genetic information and empower consumers with personalised health insights.
Anne Wojcicki: A Yale biology graduate and former healthcare investment analyst, Wojcicki brought scientific and business acumen to 23andMe. She led the company as CEO through its IPO and subsequent challenges before resigning on March 24, 2025, to pursue an independent bid to acquire the company.
Linda Avey: With experience in genomics and bioinformatics, Avey focused on the scientific foundation of 23andMe’s consumer offerings. She left the company in 2009 and later co-founded We Are Curious.
Paul Cusenza: An MBA graduate from Harvard Business School, Cusenza contributed to 23andMe’s operational strategy in its early days.
Despite securing over $1 billion in funding and a once-thriving consumer base, the company could not maintain growth or pivot successfully to other revenue streams. Most notably, the company never achieved profitability in its 18-year history, following a pattern previously seen with companies like DeCode Genetics, which went bankrupt in 2009 after failing to make the “pure genomics” business model work. Here’s a breakdown of what led to 23andMe’s downfall and what lies ahead.
Plummeting valuation and financial struggles
23andMe’s journey from a high-profile IPO to bankruptcy underscores the challenges of maintaining a direct-to-consumer genetic testing business. The company went public in 2021 through a SPAC merger, raising $600 million at a $3.5 billion valuation. However, the excitement quickly faded. By 2025, its market cap had dropped below $300 million due to slowing consumer demand and an inability to diversify revenue effectively.
The company reported a staggering net loss of $285 million in 2024. In addition, debt exceeded $500 million by early 2025, forcing the company to file for Chapter 11 bankruptcy protection. Chief Financial Officer Joe Selsavage has been appointed interim CEO as the company attempts to restructure and find a buyer.
In mid-2024, Wojcicki attempted to take the company private with an offer of 40 cents per share, but the board of directors rejected this proposal as “insufficient and not in the best interest of non-affiliated shareholders.” By August 2024, the company shuttered its in-house drug discovery unit, and in November 2024, it reduced its workforce by nearly 40% in a desperate attempt to cut operating costs.
23andMe’s failure to transition from a consumer testing model to a sustainable healthcare data platform led to its financial collapse despite efforts to monetise its genomic database through pharmaceutical partnerships.
Strategic missteps: one-time purchases without creating value
Despite raising over $1 billion from top investors, including Google Ventures, Sequoia Capital, and Fidelity, 23andMe struggled to generate sustainable revenue. This was primarily because its business model relied on one-time purchases without creating sufficient ongoing value for customers to continue engaging with the platform after their initial curiosity was satisfied.
In 2018, it entered a major partnership with GSK (GlaxoSmithKline) to leverage its genomic database for drug discovery. However, despite promising research indicating that human genetic data could double or triple drug development success rates, the partnership failed to yield significant returns. The partnership faced challenges in translating genetic data into viable drug candidates and navigating the competitive pharmaceutical landscape.
After an initial surge in demand for genetic testing kits, consumer interest waned post-pandemic, compounded by privacy concerns over DNA data usage. By 2023, DNA kit sales had dropped by over 50%, leaving 23andMe with a shrinking core business and an unproven pharmaceutical strategy.
One explanation for 23andMe’s woes is that it simply ran out of customers. As reported earlier, “Most people interested in learning about their family history and health risks have probably already taken a test. And once that curiosity is satisfied, few return to keep interacting with 23andMe”. The company attempted to pivot toward subscription-based preventive health services but couldn’t gain sufficient traction.
Privacy concerns have doomed 23andMe for years, but in 2023, users’ worry became a reality when their data was compromised. In October of that year, hackers accessed certain users’ names, birth details, ethnicities, and photos. 23andMe confirmed in December that while only 0.1% of accounts (approximately 14,000) were directly compromised, the attackers leveraged the “DNA Relatives” feature to access data from approximately 6.9 million users – nearly half of the company’s customer base.
The breach exposed varying levels of information depending on user-sharing settings, including names, birth details, ethnicities, genetic relatives, and photos. In 2024, 23andMe agreed to pay $30 million to settle the resulting class action lawsuit, further straining its already precarious finances and severely damaging consumer trust. Following the bankruptcy announcement, California authorities have urged customers to delete their data, adding another layer of concern for users.
Strong competition from AncestryDNA and MyHeritage
23andMe fierce competition in the direct-to-consumer DNA testing space, while newer AI-powered platforms disrupted the market with personalised health solutions.
A dominant competitor, AncestryDNA, captured a larger market share in genealogy and family history, overshadowing 23andMe’s offerings. In 2019, AncestryDNA launched its health testing service, AncestryHealth, but discontinued it less than two years later, demonstrating the challenges in this market segment. Another strong competitor, MyHeritage, offered deeper ancestral insights and genealogical services that appealed to a global audience.
New market entrants Helix and Nebula Genomics introduced AI-powered platforms with privacy-focused genomic analysis, diverting consumer interest. In addition, emerging players like Tempus and Color Genomics provided predictive analytics and personalised healthcare insights, appealing to healthcare providers and consumers alike.
As competition intensified and consumer preferences shifted toward health-driven insights, 23andMe struggled to innovate and retain its position. While competitors successfully pivoted to healthcare integration, 2323andMe’sttempts to diversify its revenue streams came too late and with insufficient execution.
Is your genetic data now under threat?
In the wake of the bankruptcy filing, Anne Wojcicki resigned as CEO, marking the end of an era, though she may return if her bid to acquire the company succeeds. The company plans to continue operating during bankruptcy, assuring customers they will maintain access to their data and subscriptions.
23andMe aims to leverage its genomic database to fuel innovation in drug discovery and personalised medicine, but its ability to pivot successfully remains uncertain. Also, with its vast trove of genetic data, 23andMe could become an acquisition target for biotech companies seeking to bolster their AI and genomics capabilities.
Despite its pioneering role in consumer genetics, 23a23andMe’snkruptcy serves as a cautionary tale about the challenges of scaling a genomics business in an increasingly competitive landscape.
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