(Bloomberg) -- Consumer DNA-testing company 23andMe Inc. has entered into a deal to merge with VG Acquisition Corp., a special purpose acquisition company founded by billionaire Richard Branson.

The deal values the Silicon Valley company at $3.5 billion, with Chief Executive Officer Anne Wojcicki and Branson each investing $25 million into a $250 million private investment in public equity (PIPE) offering. Bloomberg News reported news of a potential deal last week.

Other investors include Fidelity Management & Research Company LLC, Altimeter Capital, Casdin Capital and Foresite Capital. Current shareholders of 23andMe will own 81% of the combined company. A merger with a special purpose acquisition company, or SPAC, allows 23andMe to go public without the risk of uncertainty of holding an initial public offering.

Co-founded in 2006 by Wojcicki, 23andMe sells direct-to-consumer genetic testing kits. The company launched with the aim of using genetics to kick start a personalized health-care revolution, with a $1,000 test that could alert customers to potential health risks that quickly ran into regulatory issues that forced it to be pulled from the market.

Wojcicki then pivoted to ancestry testing, and later re-launched a health-care test after gaining Food and Drug Administration approval. 23andMe is now the only consumer DNA testing firm that has agency approval for its tests rather than having a doctor prescribe them.

The once-booming genetic testing business has since slowed as early-adopters have thinned out and consumers concerned over privacy have shied away. 23andMe cut jobs last year, as did rival Ancestry.com Inc.

Last year, the company turned in another new direction, licensing a drug developed in-house to another company. It also has a deal to collaborate on drug development with GlaxoSmithKline Plc, which took a $300 million stake in the company in 2018.

When the pandemic began, 23andMe launched a million-person study to look at how genomics and other factors contribute to how severely ill those who contract the virus become. To show how that research benefits customers, on Wednesday it launched its Covid-19 Severity Calculator, which calculates a person’s risk of being hospitalized due to the virus.

23andMe has raised $869 million in private funding to date and counts Sequoia Capital and Fidelity Management among its backers.

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