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Investors are all ears when it comes to hearing ailments

What’s that you say? Hearing loss startups are making noise in the venture market?

You heard right. Companies like Eargo, Decibel Therapeutics, Soundhawk, iHear Medical and Audion have pumped up the funding volume, securing hundreds of millions of dollars from venture backers.

Though hearing loss is not a traditional venture play, there are several reasons why investors are now all ears. The global market for hearing aids is growing at about 3.4 percent annually and is expected to reach $5.44 billion by 2020, according to a new study by Grand View Research. And the number of people worldwide with age-related hearing loss is expected to increase to 900 million by 2050.

What’s more, hearing ailments are increasingly prevalent among younger people, due to frequent exposure to excessive noise and the ubiquitous use of earbuds and high-powered headphones. Yet the majority of these patients choose not to address the condition due to the stigma that’s associated with traditional hearing aids.

That’s why New Enterprise Associates recently led a $25 million investment in Eargo, a nearly invisible in-ear hearing device that is designed to help people feel better about hearing loss. NEA general partner Josh Makower says many people ignore hearing loss problems because of the time and expense associated with consulting an audiologist and purchasing a custom-fit hearing device.

He says Eargo saw an opportunity to bypass audiologists and ENTs (ear, nose and throat specialists) by not requiring a professional fitting for their device, and by creating a technology that immediately fits comfortably into a range of ears.

He says Eargo looked at the pain points associated with the traditional hearing aids, such as the stigma of wearing one.

Josh Makower NEA
Josh Makower, general partner, New Enterprise Associates

“So they designed a device that is truly invisible because it is fitted in the ear,” he says. “You actually have to stand right next to someone and look down into the ear canal to notice it.”

Eargo was recently named one of Popular Science’s Best of What’s New 2015. The product was highlighted among last year’s breakthrough products in health because of its streamlined design, and because it is priced at half the average cost of traditional hearing aids.

“What Eargo offers is a direct-to-consumer opportunity for a device that fits and works right out of the box,” says Makower, who believes that Eargo stood out because of its design and lower price point.

“It’s like the Macintosh of hearing aids. It offers a better user experience for the consumer because it is thoughtfully designed,” he says.

Other venture-backed hearing solutions on the market include iHear Medical and Soundhawk. iHear, which makes what it calls “the world’s first Web-enabled hearing aid system,” raised $2.5 million from Lighthouse Capital in 2014. The company also held a successful Indiegogo crowdfunding campaign, securing $250,000 from about 1,000 backers who pre-ordered the device.

Soundhawk, meanwhile, has raised a total of $11.2 million from True Ventures, Foxconn Technology Group and others. The company’s “smart listening system” is designed to help people hear better in noisy places like restaurants and crowded shopping malls. The company takes pains to describe itself as a “hearing amplifier” rather than a medical-grade hearing aid. It looks very similar to a Bluetooth headset and the device features patented technology that enables users to personalize Soundhawk to their unique hearing profile and the acoustics of different environments.

Puneet Agarwal, a partner at True Ventures, believes Soundhawk is a good example of how the hardware revolution is solving problems in everyday life.

“As our world grows louder, a connected device focused on helping people listen better has tremendous potential,” he said at the time of the investment.

Of course, there are plenty of challenges with new hearing devices. First and foremost is competition from the large, entrenched players in the space like Siemens and ReSound. But Makower believes Eargo, for one, can avoid tangling with the big boys because it is going after an untapped patient segment.

“Our customers are not the ones finding their way into the audiologist’s office today and getting professionally fitted for hearing aids,” he says. “If anything, we are increasing the size of the overall market.”

While some hearing loss startups are targeting the device side, others are focusing on drug development. Kevin Starr, a partner at Third Rock Ventures who led an ear-popping $52 million investment in Decibel Therapeutics, believes that hearing loss is a growing pandemic that is not being properly addressed by the drug market. He says there are currently no effective therapies to repair and restore hearing.

His investment in Decibel is dedicated to discovering new medicines to cure hearing ailments.

“Despite the fact that severe hearing disorders affect people of all ages, finding therapeutic treatments remains one of the most under-resourced areas in drug discovery today,” he says.

Decibel is combining innovations in hearing science with diagnostic tools, biological insights, and therapeutic delivery techniques, to better understand the underlying causes of hearing loss and develop personalized drugs for patients.

Another drug company, Audion Therapeutics, recently raised €8.3 million (about $9 million) led by INKEF Capital, a Netherlands based venture firm. The company says its mission is to improve the lives of patients suffering from the most prevalent forms of hearing loss brought on by aging, excessive noise or exposure to ototoxic drugs.

As for exits, several venture-backed companies have managed to go public in recent years. Otonomy, a drug developer for such conditions as Ménière’s, an inner-ear disease that causes vertigo, raised $100 million in its IPO back in 2014. And Auris Medical, an ear disease treatment developer backed by Sofinnova Ventures, also went public in 2014.

Otonomy was incubated and co-founded by Avalon Ventures Partner Jay Lichter after he came down with a case of vertigo, and was disappointed with available treatments on the market. That led him to pursue the idea for a gel system that can deliver drugs to the inner ear at regular intervals. Otonomy’s stock price, however, took a hit recently after a drug trail did not meet the main goal of reducing the incidence of vertigo in patients.

A big disappointment in the space is Sonitus Medical. The company raised $80 million from investors, including Arboretum Ventures, Aberdare Ventures and Medtronic, but shut down last year after the Centers for Medicaid & Medicare Services declined to cover its SoundBite Hearing System device, deeming it to be a hearing aid, and thus not eligible for reimbursement. Sonitus argued it was actually a prosthetic, but the CMS disagreed and the company shut down soon after the decision.

NEA’s Makower is convinced that his investment in Eargo will fare much better. He even sees the company potentially getting acquired by the likes Apple, Google or Samsung, because a product like Eargo bridges the gap between consumer electronics and healthcare, an area which offers a lot of growth potential for these giants.

“The intersection of health and consumer is still in its infancy, so this is a great time for the large consumer tech companies to look at new opportunities in the healthcare space,” Makower says.

Message received, loud and clear.

Tom Stein is a Palo Alto, Calif.-based contributor. He can be reached at

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Feature illustration of listening from © akindo

Photo of Josh Makower courtesy of New Enterprise Associates