Neuralink, the neurotechnology startup founded by Elon Musk, has successfully implanted its first device in a human, Musk wrote on X. The achievement, coupled with Musk’s high profile, could boost interest in the neurotechnology vertical, which has attracted more than $8 billion in VC investment to date.
“It’s not the first neurological implant in the world,” PitchBook analyst Ali Javaheri said. “But it’s likely that the announcement will fuel both deal activity and reignite ethical debates.”
Neurotechnology companies raised $1.4 billion across 115 deals in 2023, an increase from the previous year’s $662.6 million across 127 deals. California-based Neuralink closed a $323 million round led by Founders Fund in November and received FDA approval for human clinical trials in May.
Neurotechnology has long been found in healthcare applications. Medical devices include cochlear implants, small electronic devices that can provide a sense of sound to hard-of-hearing and deaf individuals. Medical imaging and brain monitoring devices, like EEGs and fMRI machines, also fall under neurotechnology.
Notable recent deals include those for Saluda Medical, an Australia-based startup developing spinal implants, which raised $150 million in April; Paradromics, an Austin-based creator of a brain interface chip, which raised $50 million in November; and Zander Labs, a startup in the Netherlands also developing a brain implant, which secured roughly $33 million in December.
Investment in neurotechnology comes with significant risks, Javaheri pointed out. Projects tend to be capital-intensive and implanting devices in the brain is hazardous. Additionally, securing regulatory approval for testing can be arduous.
Startups are looking beyond medical usage. Neuralink’s first planned product, Telepathy, would allow users to control their phone or computer through thought. Several companies are also experimenting with military applications for enhanced training and communication. There are also startups researching entertainment usage like integration with VR devices. Ultimately, Javaheri says, the high premiums associated with these devices and revenue from intellectual property leave many opportunities for those interested in the vertical.
“There’s a lot of market out there,” Javaheri said. “There are reasons for investors to bet on this space.”
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