A Genomics Portfolio

Many applications and enablers of genomics will unfold over the coming years. By comparison to the recent past explosive growth in AI, ChatGPT is an application and Nvidia GPUs are an enabler. Chat GPT uses AI to provide a useful service to consumers. Nvidia's GPU chips make it possible to train AI models to provide useful services.

These are some examples of applications of genomics.

These are all enabled by software and tools specific to genomics technology.

Proper venture capital investing attempts to provide high long-term net internal rate of return (IRR). This can be achieved with either or a combination of large growth in valuations of companies over a long time or modest but fast growth.

This diagram represents types of companies enabling applications and enablers of genomics. They are arranged to show expected relative potential growth vertically and expected time to grow and liquidate a company.

Applications in human health tend to have the greatest potential value. For example, cures for cancer and diabetes have very large numbers of potential customers for whom a cure will avoid large costs. These products are very valuable. However, there are many competing potential cures, and each requires FDA approval, which is always uncertain. Even if there is a market win, the approval process makes the time to reach the market long.

Therapies place effective amounts of foreign substances into the body. Ensuring safety is why the FDA process is so slow. Vaccines only need to train the immune system, which requires smaller amounts of substances, which therefore have fewer possible side effects and therefore typically faster approval. Most diagnostics put nothing into the body and therefore have no side effects. Their approval process is faster. They tend to have a smaller, but still large market opportunity.

Consumer products such as probiotic cosmetics have much simpler regulatory approval processes. They provide less value to customers than cures of terrible diseases. However, the ability to bring products to market and achieve a company's potential fast is valuable.

There are many applications of genomics outside of human health. Many have benefits to planetary health through manufacturing and production of commodities in environmentally sustainable ways. These provide less direct value to consumers than cures of diseases, though some receive value-enhancing boosts from the government. Other applications of genomics to manufacturing, such as more efficient and pure extraction of metals from brines or growth of crops on otherwise unproductive land provide direct commercial benefits to other businesses. Though companies providing sustainable applications of genomics tend to have lower potential value growth than applications to health, they have much less regulatory risk and in some cases can come to market faster.

Designing and producing most applications of genomics use software and other tools. Software and tools companies provide only small portions of the underlying value to consumers, so they tend to have lower growth potential. But they typically have essentially no regulatory burden, low-cost and fast scalability, and show their revenue producing potential quickly, which can be very valuable.

A venture portfolio of genomics companies, today, constructed for maximum long term IRR might cover the following markets.