If, as monthly START-UP contributor Michael Lytton (general partner at Oxford Bioscience Partners) wrote in a recent "Nothing Ventured" column, "the first ingredient of a successful tool company deal is to invest as little capital as possible" (see "The Value in Tool Companies," START-UP, March 2004 Also see "The Value in Tool Companies" - Scrip, 1 March, 2004.), what then to make of the hefty $27 million raised by Helicos BioSciences Corp. , a developer of high-throughput sequencing systems, in its initial venture round in February? [See Deal] Only one other privately held tool company has raised more than $20 million since last September—ParAllele BioScience Inc. , also a developer of high-throughput genomics tools, in its B round last fall. [See Deal](See "ParAllele BioScience Inc.," START-UP, October 2003 Also see "ParAllele BioScience Inc." - Scrip, 1 October, 2003..)
Along with the usual arguments--the pedigree of its founders and advisers (which in Helicos' case include Leroy Hood, PhD, the inventor of the first automated DNA sequencer, and genomics pioneer Eric Lander, PhD), the potentially disruptive nature of the technology, and the ability to create new applications or substantially expand the market for existing ones--the answer appears to lie in the particular dynamics of sequencing. The market has been validated by and remains dominated by a single company, Applera Corp
