DNA: The New Dotcom?

The barriers to entry are daunting, but the DNA market provides opportunities.

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DNA technology that can help determine a person's ancestry, predisposition for diseases and possible adverse reactions to drugs has exploded in the past few years, creating a cottage industry of gene-tracing companies that some are comparing to the dotcom boom. "Once these genomic companies get the formula right, they could be very, very successful," says Quintin Lai, senior research analyst at Robert W. Baird & Co.

Mountain View, California-based 23andMe started with seed funding from Google in 2006 and has since become a pioneer in direct-to-consumer genotyping--DNA testing that looks for known markers to reveal information about everything from a person's muscle performance to a possibility that he or she might develop diabetes. Consumers send in saliva and four to six weeks later, log on to a web page with a personalized genetic analysis. "We're confident we will have a viable business," says 23andMe co-founder Linda Avey, 49. "But we're still in startup mode."

The hurdles are daunting: Some of the industry's watchers wonder aloud if the government will step in to regulate genotyping services that appear to offer medical advice without the usual doctor-client interface. 23andMe, which was also founded by 35-year-old Anne Wojcicki, wife of Google co-founder Sergey Brin, is pushing the boundary between giving customers data and giving them a medical diagnosis.

"We're generating information that not only gives you an idea of what your risks are, but it's prognostic information, too," Avey says. With or without federal regulation, experts say the nearly half-dozen gene-tracing and mapping firms aren't turnkey startups for the average entrepreneur. They often involve complex technology, medical doctors and computer scientists--not to mention millions of dollars in capital. Avey recommends that entrepreneurs start with their own money to maintain integrity. "If you need the backing of a venture capitalist, you're going to be at their whim," she says. "Look for alternatives."

The blossoming of DNA knowledge will likely create trickledown opportunities. The genetic research community is abuzz about genotyping that can tell patients exactly which drug prescriptions they need. And early online communities are already seeding crowdsourced solutions and databases that will accelerate the evolution of DNA knowledge. Those who share the marker for developmental dyslexia, for example, could communicate, share data and show support for each other online.

"Someday we'll have a complete pedigree of the entire human population," says Harvard University genetics professor George Church, co-founder of the Human Genome Project, "and everybody will be connected to everybody on a huge family tree that looks like Google Maps."

—By Dennis Romero.

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