The Narrow Path to Venture-Scale Dx Companies
BillionToOne’s IPO, the public-market reset, and what it takes to get there
On paper, BillionToOne’s success shouldn’t exist. It’s a 2016-vintage startup in diagnostics, an arena a lot of investors write off as structurally cursed due to brutal reimbursement dynamics, fast technical commoditization and often unclear clinical actionability.
And yet in November 2025, BillionToOne went public (NASDAQ: BLLN). Following several years of growth that would look aggressive even in general tech, it reached the public markets with metrics that made diagnostics feel like a venture category. Credit here goes to Hummingbird, which backed BillionToOne before meaningful commercial traction and continued to double down through the Series B, C and D, ending up with a level of ownership that makes the outcome a fund-returner.
Which immediately raises the question: was this outcome predictable early? Were there founder or market signals that should have been obvious at seed stage, or are we mistaking survivorship bias for pattern recognition? Should one even bother investing in Dx?
BillionToOne built a single-molecule cell-free DNA (cfDNA) measurement platform designed to quantify extremely rare DNA signals with high precision. Rather than deploying it broadly, the company focused on clinical wedges where the decision pathway and economics were somewhat clear. In prenatal care, BillionToOne’s UNITY test reframed non-invasive prenatal testing by enabling fetal risk assessment for recessive diseases (such as cystic fibrosis, spinal muscular atrophy and sickle cell disease) from a single maternal blood draw, which eliminated paternal samples and invasive follow-ups. In oncology, the same underlying technology supports liquid biopsy assays for tumor profiling and response monitoring; the company recently grew oncology revenue 8× year-on-year, reaching $8.7M in Q3 2025.
What made an IPO in 2025 possible, however, was most likely not product differentiation but executional discipline. Revenue scaled from single-digit millions in 2021 to over $150M by 2024. BillionToOne arrived at the public markets having accumulated deficit of only $280M since inception, an order of magnitude less than peers like Guardant, Natera, Tempus, or Caris, each of which carries $2–3B in accumulated losses.
For public investors, that combination of fast top-line growth and unusually tight capital efficiency most likely presented BillionToOne as a scaled operating company entering its next phase, rather than another cash-burning diagnostics bet.
More broadly, BillionToOne’s IPO debut did not happen in isolation. Second half of 2025 marked a meaningful re-rating of diagnostics as a category, driven by two major trends:
large-scale strategic transactions (including Abbott’s ~$23B acquisition of Exact Sciences and Hologic’s ~$18B take-private which are in top 3 largest transactions of last 10 years);
re-emergence of credible public-market growth stories (Natera recorded $1.70B revenue in 2024 (+57% YoY), targeting >$2.0B in 2025 with 61–64% gross margins;
Guardant recorded $739M revenue in 2024 (+31%), and Q3 2025 run-rate crossed $1B with 40% oncology volume growth and Shield colon-cancer screening ramping).
Natera and Guardant both returned to durable double-digit revenue growth, with improving margins and clearer potential paths to profitability. Interestingly, Natera remains Stanley Druckenmiller’s largest disclosed public equity position, a rare signal of conviction in a sector most macro investors have historically avoided.
After several years of underperformance that reinforced the view of diagnostics as structurally unattractive, things started shifting in H2 2025. Public-market performance started to diverge meaningfully across the sector, with a subset of diagnostics companies exhibiting sustained relative strength versus broader indices.
To capture that shift more systematically, I tracked HealDx30, an equal-weighted index spanning three distinct segments of the diagnostics ecosystem: GrowthDx, encompassing high-growth molecular and oncology diagnostics players driving much of the category’s upside; PlatformDx, which anchors the category in mature, scale-driven economics; and EnablerDx, the technologies that define what labs can measure and how diagnostic data scales. The results are telling. Over the same period, HealDx30 is up 36.6%, materially outperforming the S&P 500 at 17.3%, with performance overwhelmingly driven by GrowthDx (+71.1%), while PlatformDx (+9.3%) and EnablerDx (+11.9%) track much closer to traditional return expectations. An important caveat remains: even after the 2025 re-rating, a large share of publicly listed diagnostics companies continue to trade below their IPO prices.
Diagnostics can clearly create billions of dollars of enterprise value.
The harder question is whether that value is systematically capture-able by early-stage venture funds, or whether most of the returns in diagnostics accrue too late, too slowly, and with too much capital intensity to fit the venture model. The uncomfortable truth here is that many companies do important clinical work, build solid businesses, and still struggle to deliver venture-scale outcomes. They require too much capital before commercial risk is truly resolved and often converge toward economics that look more like scaled healthcare services than technology platforms.
I do nevertheless observe some common threads across the companies that managed to break out.
Founder Continuity
In conversations with more specialized medtech fund managers, I’m frequently struck by how readily founder-CEOs are discounted, almost as if replacing them with a “professional” CEO is assumed to be a prerequisite for commercialization. I’m skeptical of that view. For venture-scale outcomes, one has to bet on a special breed of founder-CEOs who combine technical depth with a hunger to learn and a growing obsession for revenue cycles, payer dynamics, and guideline inclusion. BillionToOne, Guardant, Natera, and Tempus were all built over long arcs, with founders who stayed long enough.
Riding the Clinical Waves
Equally important is wave selection. None of the companies I mentioned above tried to will a market into existence from scratch. Companies rode expanding waves where demand was already forming and clinical evidence was rising: first NIPT, then MRD and oncology. Timing alone is probably not enough, but fighting the tide in diagnostics tends to be fatal. BillionToOne’s entry into prenatal testing coincided with broad NIPT adoption and its oncology ambitions line up with the same MRD dynamics powering Guardant and Natera. The examples that work tend to move with clinical momentum.
Platforms and Data
Riding a clinical wave alone might still not be sufficient. The winners tend to think like platforms even when they start with a single test and although specialized, they retain a high degree of optionality. Natera is a multi-pivot company: IVF/PGT (Spectrum) first, then the NIPT wave (Panorama), then the MRD wave (Signatera), with organ health layered on as another clinical vertical. Guardant expanded from profiling into longitudinal monitoring and screening. Tempus positioned itself as software and data infrastructure wrapped around testing. BillionToOne is now clearly pointing its tech stack toward cancer. The initial architecture needs to support multiple products, datasets, and revenue streams over time. These companies behave less like labs and more like software-plus-data businesses that happen to run wet labs. In Tempus’s case, sequencing the 2018 cohort cost $17.4M (with $9.0M reimbursed), but that same cohort went on to generate $48.8M of lifetime revenue by 2023 across sequencing, data licensing, analytics, and trial matching. That is over 7× the revenue generated in the initial year.
The important lesson here isn’t that every diagnostics company should prioritize data licensing or real-world evidence as a primary revenue stream. But even when data monetization is not the vertical, the flywheel still matters: each test generates data that can be reused to improve products, strengthen clinical evidence, inform guidelines, or unlock new use cases over time. Companies that design their labs, data infrastructure, and analytics with that reuse in mind create optionality that compounds well beyond the initial assay. Visualizing this kind of math early is a useful discipline when making capital allocation decisions around compute, data generation and hiring.
Geographic Asymmetry
From a European perspective, the geographic reality is hard to ignore. Any diagnostics company that aspires to matter at scale eventually has to win in the U.S. market since that’s where the commercial center of gravity remains. It’s initially hard to, for example, out-hire US teams in Austin or San Carlos, but I do see a growing number of European founders who are crazy enough to try.
The usual justification for backing European founders is that they start deeper on the technical stack. Some of that is undoubtedly cope. But there are European teams beginning with genuinely hard, non-incremental problems at the measurement layer: new ways of extracting signal, novel computational approaches, or fundamentally different tradeoffs between sensitivity and cost. Some of these will line up the right combination of founder ambition, clinical wave, and platform potential plus be stubborn enough to compete directly. And it’s hard not to find that exciting.