54gene, an African genomics business, has let go of 95 people, or nearly 30% of its 290+ employees. Dr. Abasi Ene-Obong started the three-year-old startup in 2019. Its goal is to fill a gap in the global genomics market where less than 3% of the genetic material used in pharmaceutical research comes from Africa. This is true despite claims that the genetic diversity of Africans and people of African ancestry exceeds that of all other world groups.
Investors like Y Combinator, Adjuvant Capital, Cathay AfricInvest Innovation Fund (CAIF), and others have put a total of $45 million into 54gene, including a $25 million Series B investment last September. A significant portion of the company’s investment goes toward its biobank (which can now hold more than 300,000 samples) and lab testing facilities.
In 2020, 54gene saw an opportunity to make more money during the pandemic and changed its business model to test for COVID-19, which was in high demand in Africa when the company closed its Series A funding. At one point, 54gene was one of Nigeria’s top providers of COVID testing, making it a significant component of business operations.
But because of the sharp drop in test results, several people 54gene hired for COVID operations had to be let go.
The COVID business line affected the lab and sales departments and other business operations that helped the COVID business line. These jobs, as well as those of contract data entry and sample collection officers, were cut because the business line was almost completely shut down. Other operational and technological positions were also impacted.
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“Like a lot of other businesses dealing with the current market situation, we, too, have had to make changes to our headcount and finances to stay competitive,” said a company spokesperson, adding that the staff cut took place on August 18.
A spokeswoman for the company said that 54gene would extend health insurance for three more months and give affected workers more money and legal help as required by local laws.
Rising interest rates and other factors, like the recent long bull market that affected both the public and private markets, make it hard for tech companies to do their jobs. As a result, layoffs are common. Due to recession fears, investors are cautious with their funds, focusing primarily on the growth and late-stage firms. To stay in business, startups have had to cut costs and staff, and those that have been able to raise money have had to adjust their valuations to what they were before the pandemic.
54gene joins a growing number of African companies that have had to cut their staff because of a bear market, even though they have raised millions of dollars in the last 18 to 24 months. Swvl, Vezeeta, Wave, Sendy, and Marketforce are further businesses.
Why Is This New Update from 54gene So Shocking?
This new update from 54gene is quite shocking because, months ago, it was confirmed that they had raised about $25 million to expand their medical research and capacities. Read about how that happened. Africa only makes up less than 3% of the genetic material used worldwide in pharmaceutical research.
Africans and people of African descent are said to have the most genetic diversity of any group, so the huge difference is very surprising. African genomics startup 54gene has been leading the charge to close this gap in the global genome market since its 2019 launch. The business received $25 million in Series B funding to support its initiatives.
This funding round came one year after Dr. Abasi Ene-company Obong raised $15 million in a Series A round and two years after finishing a $4.5 million seed round. Since its beginning, 54gene has raised more than $45 million. Since most of the studied genomes worldwide originate from regions other than Africa, the continent remains a significant source of new genetic data for studies on human health and medication discovery.
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The work of 54gene is pertinent in this context. This research is done and used by the company to make sure that Africans will benefit from future medical and pharmaceutical advances.
When we asked about the company in 2020, the CEO, Ene-Obong, said that 54gene is looking for willing people to give genetic samples through swabs or blood tests.
It still functions in much the same way. However, 54gene opened its own genetics sequencing and microarray facility in Lagos last September instead of relying on other healthcare facilities like hospitals or sending the samples abroad for processing. The business collaborated on this with American biotech firm Illumina.
Innovations in health technology take longer to come about than in fintech and other industries that grow quickly, like e-commerce. In less than two years, 54gene became one of the few startups in its field and even in Africa to get from the seed stage to Series B.
54gene had a 60,000 sample capacity for its biobank at the time of its most recent boost. Ene-Obong said that the two-year-old business could store up to 300,000 samples in its biobank, which is close to its long-term goal of storing up to 500,000 samples.
The money was used to boost its skills in clinical trials for precision medicine, target identification and validation, and sequencing. Its spread over the African continent is also very significant. It is so sad that after months, this firm has resolved to lay off some employees, causing a major spike in the unemployment rate in Nigeria. We can only wait to see how things turn out for 54gene.
