Gene-sequencing giant Illumina has founded a biotech incubator to develop applications for its technology. Credit: Cultura RM/Alamy

As the cost of high-throughput genetic sequencing plummets, one of the industry's leading firms is supporting entrepreneurs who it hopes will showcase what the technology can do.Genetic-analysis company Illumina today announced the first startup firms it has selected to help prove the worth of technologies that use next-generation sequencing. The Illumina Accelerator programme will support three companies — Encoded Genomics, EpiBiome and Xcell Biosciences — that hope to use sequencing in biopharmaceutical development and agriculture, and to develop biomedical research tools and diagnostics. The companies were chosen from 30 applicants, Illumina said.

Nobel for microscopy that reveals inner world of cells World's oldest art found in Indonesian cave Gravity rivals join forces to nail down Big G

Illumina, in San Diego, California, hopes that the funding will boost the number of firms marketing genomics applications outside the company's core areas of reproductive health and oncology, at a time when venture funding is relatively scarce for early-stage biotechnology companies.“We are expanding the market for next-generation sequencing,” says Mostafa Ronaghi, Illumina’s senior vice-president and chief technology officer.Amanda Cashin, who previously led a life-sciences venture-investment firm at Alexandria Real Estate Equities in San Francisco, California, will lead the programme.

Biotech boost

Other biotechnology entrepreneurs say that the programme is a smart way for Illumina to boost the size of its own potential market: “They have this amazing technology, and they’re thinking, ‘How do we accelerate its adoption?’” says Deniz Kural, chief executive of Seven Bridges Genomics, a cloud-based bioinformatics company in Cambridge, Massachusetts. “It’s hard for any one company to explore all these markets.”Genetic sequencing is a valuable tool for researchers in the lab, and is starting to prove its worth in the clinic, allowing physicians to diagnose genetic diseases in patients and even analyse the DNA of unborn children. But backers of the technology believe that the cost of acquiring and using sequencing-based technologies is still deterring entrepreneurs from developing a multitude of more specialised or fundamental applications. For example, one of the three companies selected by Illumina, EpiBiome, wants to develop bacteria-fighting viruses to treat infections in cattle. Encoded Genomics is combing the human genome for information that might be valuable in drug development, and Xcell Biosciences is developing a tool that would let physicians grow specific cells from patients' blood.“There’s a clear absence of opportunity and mentoring for people who want to do biotechnology startups,” says Jonathan Rothberg, who has founded several sequencing-related companies and is now chief strategy officer of 4combinator, a startup accelerator in Guilford, Connecticut, that makes large investments in companies that aim to develop new health-care technologies. “It’s important to create an ecosystem to fill that long tail of dozens or hundreds of specialty applications that fulfil the potential of next-generation sequencing,” Rothberg says.Illumina’s programme borrows elements of other successful technology incubators, especially Y Combinator, in which companies relocate to California's Silicon Valley for three months in exchange for funding, mentoring and access to venture investors. Illumina Accelerator companies must similarly relocate to San Francisco for six months, although the three companies chosen for the first round are already based in the Bay Area.

Seeds of fortune

Each company receives US$100,000 in 'convertible notes' — loans that can be repaid as stock shares from Russian technology investor Yuri Milner. Illumina gets a 10% equity stake in each company in exchange for lab and office space in San Francisco, help from an Illumina senior scientist in designing and running experiments and $100,000 of credit for Illumina reagents and kits. The companies will also receive $20,000 in credit.Kural says that the accelerator programme could help Illumina keep pace as the sequencing industry shifts its focus away from the sale of instruments and reagents towards software. As an example, he pointed to the announcement on 25 September that the US National Cancer Institute has awarded nearly $20 million to Seven Bridges Genomics and two academic centres to put data from major cancer genetics sequencing projects in the cloud.“At the end of the day they make a machine that produces As, Ts, Cs and Gs, and it’s probably temporary that the hardware business is going to dominate genomics,” Kural says. “This is partly Illumina’s strategy of staying relevant even when the focus shifts from hardware to software.”

Illumina is already accepting applications for its spring 2015 accelerator programme; it hopes to fund two six-month classes every year. Ronaghi says that Illumina is looking for startups that use genomics technologies to address applications with a “reasonable” market potential, and that are led by promising teams.

”The strongest thing we pay attention to is the team dynamic, and the knowledge they have about the specific market they want to pursue,” Ronaghi says.