First startups graduate from Illumina Accelerator as deadline for next phase nears

The first clutch of companies have graduated from Illumina Accelerator, the startup incubator program the sequencing giant set up last year. And with more than $40 million in VC cash secured to help the startups grow, Illumina ($ILMN) is now looking for the next group of companies to join.

Illumina picked Encoded Genomics, EpiBiome and Xcell Biosciences as its first batch in October, since when the startups have made use of the seed funding, lab capacity and support that are available in the program. The firms are working across a wide range of the genomics field. Encoded Genomics is looking to the noncoding genome for drug discovery, EpiBiome is researching the microbiome to develop therapies for dairy cattle and Xcell is involved with liquid biopsies. Yet despite this diversity, each has talked up the same elements of the program: Money, advice and equipment.

For Encoded Genomics, increased access to these essential elements has translated into tangible boosts to its business. "During our six months at Illumina, we formed a single-digit million-dollar partnership with a large pharmaceutical company, generated 15 [terabytes] of sequencing data and advanced our internal pipeline programs," the company said in a statement. About 30 companies applied for the first phase of the program. Illumina is accepting applications to participate in its next funding cycle until September 1.

The big question now is how the companies will fare outside of the incubator. Y Combinator, the tech startup boot camp from which Illumina Accelerator borrowed ideas, is known for giving a start to successful companies such as Airbnb and Dropbox. But many graduates disappear without a trace, despite having been picked from hundreds of applicants by YC, groomed by mentors and given access to investors. In 2013, YC cofounder Paul Graham said 37 of the 511 companies to have gone through its doors had been valued or sold for upward of $40 million.

An alternative way of presenting the data is that 93% of YC graduates never grow into notable tech companies. Whether the success rate plays out differently in biotech--a field in which YC is expanding quickly--remains to be seen.

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