Over the past year, the brain has emerged as tech’s bold new frontier. Venture-backed startups are exploring innovative ways to control brainwaves, sharpen the mind and enhance cognitive performance.
Companies like Halo Neuroscience, InteraXon, truBrain, Peak, Lumosity and Nootrobox have attracted hundreds of millions of dollars in funding for their apps, games, supplements and wearable devices, all of which are aimed at boosting brainpower.
“The biggest challenge is that historically, brain-related deals have been very capital-intensive endeavors,” says Shahin Farshchi, partner at Lux Capital, which led a $9 million Series A round in Halo Neuroscience earlier this year.
“But as a VC, you can’t be overly constrained by past burdens. You need to appreciate what the future can hold given the consumerization of technology and where the trends are going.”
He argues that neurotechnology has advanced to the point where it is accessible for the average investor.
“Neurotech in the late ‘90s and early 2000s was comprised of expensive brain-stimulation machines for treating diseases like depression and obesity,” Farshchi says. “But more recently, a device with one LED and a few sensors can be as smart and as sophisticated as one of those machines.”
On the demand side, he sees a general public that is hungry for more information about their health and bodies. Look no further than the explosive success of Fitbit for proof, he says.
“If you asked the average person about neurotechnology 10 years ago, it would have been viewed as something to treat a disease,” he says. “But now it’s more commonly viewed as something you can use to achieve your peak performance. People are more open to adopting this technology.”
That’s a big reason why he invested in Halo Neuroscience, which has developed a non-invasive brain-stimulating device capable of enhancing cognitive performance.
The $549 device, which does not require Food and Drug Administration approval, looks like a pair of high-end headphones. It is fitted with small spikes that brush the scalp and send electrical pulses into the brain.
Currently, it is marketed primarily to elite athletes, helping them reach peak performance by priming their brain circuits. For instance, the U.S. ski-jumping team revealed that athletes who trained with Halo improved their “jump force” by 31 percent.
The device also has significant applications beyond sports. For instance, Halo Chief Executive Daniel Chao has said he will seek FDA clearance to market Halo’s device as a way to help stroke victims recover their physical capabilities.
It’s easy to imagine consumers could soon strap on a Halo for that extra brain boost before a big meeting or while studying for a test.
“I could see a time when a device like Halo becomes part of our daily routine,” Farshchi says. “The first thing I grab when I wake up is my iPhone. It’s integral to my workday. Halo could also become an integral experience for all of us.”
Another interesting startup in the brain space is InteraXon, which has raised about $17 million to date from OMERS Ventures, Felicis Ventures and Horizons Ventures.
InteraXon’s flagship product is the Muse headband, which uses brain-sensing, medical-grade electroencephalogram, or EEG, technology to measure whether the mind is calm or active, similar to how a heart monitor senses heart rhythms. When calm, you hear peaceful weather sounds. When the mind wanders, the weather intensifies.
“Muse is starting in the meditation space because stress is a clearly understood pain point,” says Sundeep Peechu, managing director at Felicis, who led the firm’s investment in InteraXon. “Meditation has been scientifically shown to reduce symptoms associated with stress, depression and anxiety as well as improve productivity and quality of life.”
He adds that many people want to meditate, but find it too difficult and time-consuming to learn. The beauty of Muse, he says, it that makes meditation easy for the average person by providing an immediate feedback loop that helps users hear what’s happening in their brain and then guides them back to a calm state.
Today, about 18 million U.S. adults, or 18 percent of the population, practice meditation, according to the National Center for Complementary and Integrative Health. But Peechu says the market has room to expand.
“The number of people who want to practice meditation is much larger than the number of people who are actually doing it,” he says. “So Muse has an opportunity to capitalize on that pent-up demand.”
But with a current retail price of $300, Muse may not attract the average consumer. Peechu expects to see mass adoption once the device drops to $50, which he says the company is working toward now.
“When people first looked at the fitness wearable category five or six years ago, nobody thought consumers would spend billions of dollars just to track the number of steps they are taking,” he says. “But today, Fitbit alone is doing $1.9 billion in annual sales. There is a big change underway in how people are approaching their health.”
Brain-training games and apps are another hot sector. Lumosity, which has been around for nearly a decade now, has raised $67.5 million in total funding for its Web and mobile games that are based on neuroscience and designed to challenge core cognitive abilities. Recently, some competitors have entered the market. Peak, which bills itself as a “mobile-first” brain-training gaming company, last year raised a $7 million series A round led by Creandum.
Daniel Blomquist, a partner at Creandum who led the investment, says brain training is booming as people seek not only to stay in peak physical shape but also top mental shape. “Peak addresses an area that we believe strongly in, that people are increasingly looking for ways to track and improve their performance and doing so with mobile-first solutions,” he says.
It’s not just brain-boosting devices and apps that VCs are targeting. They are also investing in food and beverages containing nootropics, or “smart drug” cocktails with cognitive enhancing properties.
Nootrobox, for instance, recently raised $4.6 million from Andreessen Horowitz. The company makes three lines of supplements called Rise, Spring and Yawn. All its compounds are generally regarded as safe by the FDA. The Rise blend, for example, includes bacopa for improved memory, L-theanine for relaxation and improved learning, and caffeine for alertness.
Another nootropics startup is truBrain, which raised $1.4 million last year from BrightStone Venture Capital and others. The company’s first product is an energy drink that leverages neurotechnology to help consumers sharpen their focus.
TruBrain says that it is the world’s most tested productivity drink. The company says its neuroscientists measured the brainwaves of CEOs, artists and lawyers to understand the data patterns behind their best days and worst days. It then found the nutrients that worked best for people when they were managing stress, juggling distractions, and thinking on their feet.
“You know that feeling of being in the zone that athletes sometime get? That can’t-miss feeling actually correlates to certain EEG patterns in the brain, and there has been a lot of research around trying to replicate that brain state,” says Seth DeGroot, a managing partner at Minneapolis-based Brightstone.
“That research is now starting to manifest itself in apps, devices, and packaged goods like truBrain.”
He adds that the functional beverage market, currently led by high-calorie, heavily caffeinated drinks like Red Bull, is ripe for disruption and innovation, especially as millennials look for healthy alternatives.
“We are only scratching the surface of the brain and how to optimize its potential,” DeGroot says. “That challenge appeals to lots of startups, so I see the brain as a quickly emerging space.”
Tom Stein is a Palo Alto, California-based contributor. He can be reached at tom.stein@yahoo.com.
Action Item: For more info about the power of meditation from the National Center for Complementary and Integrative Health: http://1.usa.gov/1BQ4I9l
Downloadable Data: Select targets focused on brain power
Photo illustration of human hand holding brain courtesy of ©iStock.com/tonefotografia.
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