What Does a Winning Brain-Computer Interface Company Look Like?

Recently, the brain-computer interface company founded by Elon MuskNeuralinkHaving secured another $43 million in venture capital, Neuralink’s cumulative funding from multiple previous rounds now exceeds $700 million (nearly RMB 5 billion).

However, Neuralink’s “high-profile” moves did not stop there; in mid-September this year,Neuralink Announces Official Approval to Conduct First Human Trial, Implanting Device in the Brains of ALS PatientsAccompanying this milestone event was a collective surge in China’s secondary market. According to VCBeat, Innovate Medical saw its stock price rise by more than 12% from September 18 to 28, while Guan Hao Biotechnology and Shenzhou Taiyue each gained over 7%.

But beyond the hype, Neuralink currently faces numerous challenges. It is reported that on the day after the official announcement of its first human clinical trial, the U.S. Physicians Committee for Responsible Medicine accused Neuralink and the University of California, Davis, of abusing and killing monkeys in animal experiments, with 15 out of 23 rhesus macaques dying during the trials. In fact, the FDA had also raised questions about the safety of these experiments.Therefore, from 2019 to the present, Neuralink's applications for human clinical trials have been rejected by the FDA twice.。

Extending outward from Neuralink’s “experience,” it appears to mirror the current trajectory of the entire brain-computer interface (BCI) industry: on one hand, there is intense hype and attention in the capital markets; on the other, significant uncertainties arise from safety concerns and frontier innovation. Amidst this, one thing is certain: brain-computer interfaces will inevitably achieve notable “success” in the future.

This year marks the 50th anniversary of the formal proposal of the “brain-computer interface” concept. Let us take a closer look:Has the Brain-Computer Interface Actually “Connected”?

Although the market is currently in a deep freeze, brain-computer interfaces appear to have remained largely unaffected, even showing signs of “bucking the trend.”

Figure 1. Representative companies in the brain-computer interface sector that secured financing from January to November 2023 (Data source: Dongmaicheng)

According to incomplete statistics from the Arterial Orange Database,From January to November 2023, a total of 41 financing rounds occurred in China's brain-computer interface sector., with as many as one hundred participating investment institutions, among whichCDH, Fortune Capital, Lilly Asia Ventures, Qiming Venture Partners, Danlu Capital, Nuoyuincluding leading institutions. And if we trace back further,Sequoia, Matrix Partners China, Hillhouse Capital, Legend Capitalhave also successively bet on this field.

So, returning to the starting point, what exactly is the source of the “confidence” that has kept brain-computer interfaces in the spotlight, maintaining their popularity even during a capital winter?

The answer is multifaceted. From the perspective of the brain-computer interface (BCI) industry itself, it is at the technological frontier and also holds substantial market potential.Considered the Last Blue Ocean in the Entire Healthcare Market. In addition, according to Li Xiaojian, founder and CTO of Weiling Medical, “Brain-computer interfaces have currently reached the tipping point for clinical translation, with implementations in numerous medical scenarios that meet certain needs.”. In addition, the diseases targeted by brain-computer interfaces, including amyotrophic lateral sclerosis (ALS), Alzheimer’s disease, and depression, currently lack effective treatments, leaving clinical needs unmet; hence, high hopes are placed on this technology.

Of course, “Elon Musk” is also regarded as a key factor behind the current prominence of the brain-computer interface (BCI) industry. In this interview, researchers from the scientific community, as well as entrepreneurs and investors from the industrial sector, all discussed his significant impetus to the BCI industry. After all, as one of the most influential and innovative entrepreneurs of our time, Musk’s series of moves and breakthroughs in the BCI field in recent years have endowed this frontier area with boundless possibilities for imagination.

Beyond the various “internal factors,” changes across the healthcare industry and capital markets have also created conditions for the continued mainstream breakthrough of brain–computer interfaces (BCIs). On this point, Yang Zhiwen, Founding Partner of Nuoyu Capital, remarked, “The entire capital sector is currently facing significant confusion, with most investors uncertain about which projects to invest in, as many fields have become highly saturated at this stage.Under such circumstances, it has suddenly become apparent that there are numerous neurological disorders lacking effective treatments, such as Alzheimer’s disease (AD), depression, anxiety, and sleep disorders. Exploring these conditions represents a major challenge facing humanity, and neuroscience has naturally emerged as a vast and promising frontier attracting widespread attention. Furthermore, investing in hard technology is currently a major trend, which has indirectly fueled the present investment enthusiasm for brain-computer interfaces.

It is precisely based on this popularity,Brain-Computer Interfaces Have Reached a Stage Requiring “Proof of Performance,” Facing a Critical Juncture That Is Both a Period of Growth and a Bottleneck。

The "development phase" is mainly reflected in two aspects,One side is the massive breakthrough in related core technologies, for instance, in electrodes. In recent years, the gradual maturation of flexible electrode technology has enabled more accurate acquisition of electroencephalographic (EEG) activity information with improved spatial resolution. Taking Jieti Medical as an example, its team adopted an ultra-flexible electrode design; given that the inherent flexibility of the material itself is difficult to further enhance, they reduced bending stress by decreasing electrode thickness. Furthermore, as the capabilities of artificial intelligence continue to expand and algorithmic performance strengthens, its application value in the field of brain-computer interfaces is rapidly increasing.

On the other hand, the “development phase” is also reflected in the successful deployment of brain-computer interfaces in numerous clinical scenarios.. It is reported that,Brain-computer interfaces currently span from motor impairment disorders such as amyotrophic lateral sclerosis (ALS) and spinal cord injury, to neuromodulation applications including epilepsy and pain management, and further to psychiatric conditions such as depression and obsessive-compulsive disorder (OCD)., have already become feasible in reality. For instance, in combating mental disorders, brain-computer interfaces (BCIs) can more accurately monitor and assess patients’ emotional states by identifying the phase and amplitude of electroencephalogram (EEG) signals, and develop specialized training tasks targeting EEG patterns associated with specific emotions to adjust patients’ conditions, thereby achieving precise neuromodulation.

Of course, everything has two sides; while it holds potential for implementation across multiple clinical scenarios,Brain-Computer Interface Companies Also Face the Thorny Issue of “How to Select the First Indication”In this regard, Yang Zhiwen, founding partner of Nuoyu Capital, stated, “Failing to select the right first indication can be disastrous for brain-computer interface companies.“...because as a startup, its fund size, workforce, and other resources are limited. Moreover, brain-computer interface technology itself requires substantial investment. Therefore, any misstep in strategic choices can easily lead to adversity, or even ‘death.’”

This represents one of the current “bottlenecks” facing the brain-computer interface (BCI) industry: namely, how to select target indications. However, taking into account factors such as implantation efficacy and medical device registration and review regulations, BCI companies currently prioritize entering the market through rare diseases (e.g., amyotrophic lateral sclerosis) and terminal conditions lacking clinical solutions (e.g., spinal cord injury). Subsequently, they expand to severe disorders (e.g., Parkinson’s disease, Alzheimer’s disease), chronic or mild conditions (e.g., treatment-resistant depression, pain management), as well as applications such as intraoperative mapping of functional brain regions during neurosurgery for diagnostic purposes and treatment of refractory epilepsy with clearly defined pathogenesis. This approach has become the R&D roadmap for many BCI companies.

However, all this requires time to mature, but the market is clearly impatient.Due to pressure from the secondary market, brain-computer interface companies need to demonstrate certain monetization capabilities at this stage.。

In response, a senior investor explained the reasons to VCBeat, “The domestic secondary market is currently in a sustained downturn, which has raised the bar for the primary market. Therefore, when selecting investment targets, there are stringent operational requirements for companies, namely that they must possess a certain degree of ‘self-sustaining’ capability and generate stable cash flow. This is increasingly becoming a prerequisite for brain-computer interface (BCI) enterprises.”

Therefore, from an overall perspective, after experiencing the investment boom in the previous two years, the market has undergone a wave of education regarding brain-computer interfaces (BCIs). As a result, there is now a basic understanding of technical principles, clinical applications, and priority implementation scenarios. By this year,Brain-Computer Interfaces Have Reached a Milestone Stage of Practical Implementation。

Cai Lei, former vice president of JD.com, is a patient with amyotrophic lateral sclerosis (ALS). In September this year, he publicly stated that he currently has no time to participate in brain-computer interface trials, and discussedBrain-computer interfaces cannot save lives at this stage; they can only enhance communication. Currently, my primary focus is on overcoming diseases through scientific research and drug development.。

In fact, many people currently choose to remain “silent” on brain-computer interfaces (BCIs). After all, for many, BCIs are still a concept that feels too novel, distant, and time-consuming, with numerous key issues yet to be resolved.

For instance, in terms of the most critical aspect of safety,The primary challenge to address is how to overcome the hurdles of biocompatibility.. As is well known, implanting an object into human tissue triggers an immune rejection response, thereby increasing the risk of infection. Invasive brain research faces the most stringent clinical requirements, as the cerebral environment can exhibit a wide variety of conditions, many of which are life-threatening.

Secondly, at the technical level, a typical example isData Acquisition TechnologyRestrictions. The human brain contains at least 86 billion neurons, with each neuron forming thousands of connections, creating a vast network whose workings remain poorly understood given the current limits of human knowledge. For instance, Neuralink’s product entering clinical trials, the N1 implant (a brain-computer interface chip), features 64 threads with 1,024 electrodes distributed across them, enabling direct connection to neurons to record neural activity. Even so, this represents only one hundred-millionth of the total number of neurons in the human brain.

In this regard, Tao Hu, founder and chief scientist of NeuroXess, once stated,The number of electrodes must reach at least the order of 100,000 for brain-computer interfaces to make substantial progress at the application level; however, analyzing such a massive volume of data exceeds the capabilities of current computing power.。

Then, in terms of approval and industry standardization,Relevant regulatory policies and regulations are not yet mature.. According to industry insiders, regulators remain relatively stringent regarding the commercial application of brain-computer interfaces as medical devices, requiring substantial evidence of long-term safety, efficacy, and ease of implantation, all of which necessitate extensive clinical data for support.

Of course,Brain-Computer Interfaces Still Face Significant Ethical Challenges at PresentUnlike other medical devices that can be removed at any time when no longer needed, implantable brain-computer interfaces (BCIs) continuously collect and decode vast amounts of human brain signals. Should data privacy and security issues arise, intruders could potentially eavesdrop on the “whispers within the human brain,” and might even use algorithms to exert relatively precise control over an individual’s emotions. However, from the perspective of professionals, this remains a long-term risk; current technological explorations have not yet crossed ethical boundaries.

However, these issues are indeed real. In the face of such challenges, are there any effective solutions available at present? The answer is no. In this survey, many professionals explicitly stated that,The issues currently facing the brain-computer interface industry are, in fact, unsolvable at present.。

The core reason behind this isCurrent basic research in brain science is still far from sufficient.In fact, there are currently very few departments or schools in China that are officially named after neuroscience. Furthermore, the field of brain-computer interfaces (BCI) integrates multiple disciplines, including computer science, neuroscience, bioengineering, and mechanical engineering. Therefore, clarifying its industrial logic or addressing industry-related challenges will require time for maturation and consolidation.

Therefore, for investors,It is essential to prepare for long-term engagement while also seeking greater certainty within the industry.First, let’s discuss “long-term companionship.” Peng Lei, founder and CEO of BrainCo (Naohu Technology), has stated that brain-computer interface (BCI) ventures require investors who can endure long periods without immediate returns. This is because both R&D and commercialization largely lack precedents to draw from, meaning everyone is essentially navigating uncharted territory. However, once breakthroughs are achieved, the returns are sure to be substantial.

Returning to the theme of “Seeking Certainty,” in fact, although brain-computer interfaces (BCIs) are currently fraught with uncertainties, there are certain findings that have been scientifically validated as certainties. For instance, according to Yang Zhiwen, Founding Partner of Nuoyu Capital, in the current BCI industry,Neuromodulation is the most certain among all uncertainties., given its long history of clinical application and the widely demonstrated efficacy in areas such as movement disorders and pain management, the next step is simply to extend this investment thesis further.

Therefore, whether brain-computer interfaces (BCIs) currently represent a blue-ocean market or an investment quagmire inevitably yields different answers for different stakeholders. Those who remain mired in uncertainty are highly likely to face predicaments in the future, whereas pioneers who identify greater industry certainties are well-positioned to seize the blue-ocean market first and secure their “entry tickets” to the initial wave of industrial dividends.

According to McKinsey's estimates,The potential market size for global medical applications of brain-computer interfaces is expected to reach $40 billion to $145 billion between 2030 and 2040.Among these, serious healthcare applications focused on the treatment of central nervous system disorders have a potential market size of $15 billion to $85 billion, while consumer healthcare applications centered on emotional assessment and intervention have a potential market size of approximately $25 billion to $60 billion.

Amid the vast market potential, competition has become inevitable. Li Chengyu, Director of the Major Tasks and Technology Transfer Office at the Institute of Neuroscience, Chinese Academy of Sciences, once remarked that when we began conducting genuine brain-computer interface experiments a decade ago, there were likely only twenty to thirty companies involved.But now there are already hundreds of companies, so as the industry progresses, market competition will inevitably become increasingly intense.

In response, a growing voice within the industry is becoming increasingly prominent, namelyWhat Does a Brain-Computer Interface Company Poised for Future Success Actually Look Like?? By synthesizing the perspectives of various professionals, including researchers, entrepreneurs, and investors, VCBeat has identified the following four characteristics.

The first point is the team: it should have a halo effect and also embody the “Five Blessings.”. Investors have noted that over the past one to two years, “team” has often accounted for nearly half or even more of the evaluation criteria when most institutions select brain-computer interface (BCI) targets. The underlying logic is that BCI technology is relatively cutting-edge; especially in the early stages of industry development, the value of the team is greater. This is because, in an emerging technological sector, teams with strong reputations typically possess greater risk resilience, making them more likely to succeed.

Beyond the “halo effect,” team completeness is also crucial. As an interdisciplinary field, brain-computer interface (BCI) research requires close collaboration across multiple disciplines, including neuroscience, information science, mechanical engineering, and medicine. Therefore, a mature BCI team should comprise materials specialists, electrode engineers, clinicians, electronics experts, and AI system designers, while an operations team is equally indispensable.

The second point is the ability to gain a deep understanding of the brain-computer interface (BCI) industry and identify one's position within the industrial chain.. In an interview, experts stated, “If those driving technological breakthroughs lack insight into which technologies should be prioritized for disease treatment or what technical capabilities are required to treat specific diseases, this represents a clear and fatal weakness.”. The underlying implication is that brain-computer interface technology heavily tests a team’s systemic-level understanding, as the initial choices directly determine many subsequent technical pathways, making them critically important.

Furthermore, it is equally important to identify one’s position within the entire industry chain. Regarding this, Li Xiaojian, Founder and CTO of MicroMind Medical, stated in an interview with VCBeat, “In the future, the industry chain will gradually become more complete and mature. Prior to that, teams must have a clear technological roadmap and be able to clearly determine their future position within the overall industry chain. Only in this way can teams gauge the appropriate pace of advancement, as moving too slowly or too rapidly is equally inappropriate.”

Third, while pursuing long-term value, it is also essential to capture short-term gains; avoid futile efforts and unnecessary attrition.In fact, after two years of prioritizing “team” in investment decisions, investors are now shifting their focus to the ability of brain-computer interface (BCI) companies to “deliver results”—specifically, whether their core products have received regulatory approval, gained recognition in the clinical market, and attracted paying customers. In short, the key question is whether these companies can generate stable cash flow at this stage.

At this juncture, Yang Zhiwen, Founding Partner of Nuoyu Capital, offered profound insights, stating, “In the current capital market environment, a company’s profitability has become a critical indicator. This means that while enterprises must pursue innovation and adhere to long-term value and objectives, they must also introduce products capable of generating continuous cash flow over the next two to three years. However, these products must be synergistic with the core business and not overly disconnected.”

Fourth, we must pursue a technological development path suited to China’s national conditions and build the capability to compete directly with leading overseas enterprises.. Brain-computer interfaces (BCIs) are a key frontier technology in China. As early as 2021, the Ministry of Science and Technology of China launched the “Brain Science and Brain-like Research” 2030 Program, with an estimated funding allocation of approximately RMB 50 billion over the next five years. This indicates that China’s BCI industry holds substantial market opportunities, with significant potential for domestic development and localization.

On the other hand, although China’s brain-computer interface (BCI) sector is still in a catch-up phase, the industry has been iterating at a rapid pace in recent years. In certain technical dimensions, it has already achieved global leadership. Coupled with the current trend of Chinese medical device companies expanding overseas, enterprises that possess competitiveness in the global market will hold greater market value and are more likely to emerge as leaders in the future.

During the interview, one entrepreneur’s remarks left a deep impression.

He noted that, in many cases, when confronted with a medical scenario, we tend to adopt the perspective of able-bodied individuals, prioritizing cure as the primary goal and consequently harboring various concerns.But in fact, for patients with conditions such as epilepsy or amyotrophic lateral sclerosis (ALS), even if a complete cure is not achieved, they are often quite satisfied if treatment enables them to perform activities of daily living independently.. And this is the value of current brain-computer interfaces, namely improving patients' basic quality of life.

Of course, a significant portion of the potential of brain-computer interfaces (BCIs) remains untapped. This is precisely what scientists, enterprises, and investors currently engaged in the field are working on or plan to pursue in the future. Much like in 1973, when American computer scientist Jacques Vidal pondered “how the human brain could communicate with computers that were then as large as refrigerators,” explorers along this industry chain are already considering:How Can Brain-Computer Interfaces Best Serve Healthcare?

1. “Gao Xiaorong: 50 Years of Brain-Computer Interfaces” – Economic Observer;

2. “Is the Brain-Computer Interface Field Getting ‘Hypercompetitive’?” – Huxiu.com;

3. “Brain-Computer Interfaces: Close to Treating Depression and Paralysis, Far from Digital Immortality” — 36Kr.