This case investigates the reasons for the seemingly sudden demise of a once-successful startup and provides a basis for discussion of many potential pitfalls for late-stage and VC-backed startups.
GenapSys was a developer of a genomic sequencing ecosystem designed to empower both academic and clinical research applications. The company completed a $90-million Series C funding from Foresite Capital in November 2019, achieving the startup’s peak externally recorded post-money valuation of $895 million. The global COVID-19 pandemic’s race to find a vaccine or a cure seemed to affirm the demand for accurate and low-cost sequencing. GenapSys signed two dozen distribution agreements targeting 30 countries, and the company obtained debt financing of $75 million from Oxford Finance in February 2020. However, addressing internal concerns, in February 2021 the board of directors installed a new CEO, Jason Myers, replacing the company founder Hesaam Esfandyarpour, who remained as chairman.
GenapSys filed for bankruptcy in July 2022 and there were numerous ongoing suits and countersuits, including a claim by Foresite that it had been misled by the startup’s leadership, and charges by company founder Esfandyarpour regarding his ouster and the bankruptcy filing.
Why did GenapSys fail? Students may not agree on the central cause of the failure, but they will most likely agree that launching a revolutionary product is a difficult and high-risk venture.