The Dawn Of Brain Technology Startups Is Upon Us
This week, I assembled a small gathering of leading scientists and Silicon Valley venture capitalists to brainstorm (no pun intended) on brain startups of the future. I had met many of the scientists when they were young faculty and graduate students on the conference circuit. Most are now tenured faculty running large interdisciplinary research centers. Some are allocating tens of millions of dollars from President Obama’s Brain Initiative into brain research. One is likely to win a Nobel Prize.
I had known most of the VCs from my early days investing at Lux almost a decade ago. Many had PhDs, most carried battle scars from the cleantech era and the economic downturn that ensued. They had seen the genesis of science-driven investing initially catalyzed by exuberance followed by emphasis on basic economics and results, leading to many of their beloved technology companies hitting a wall during the downturn. They later moved on to build their careers as successful investors in marketplace, SaaS and data analytics companies. However, their primal passion for science brought them to Sand Hill on this crisp Wednesday morning. The meeting room overlooked the lush Menlo Park tree line towards the Facebook campus, contrasted by a backdrop of the barren Fremont hills. They walked in skeptical, yet intellectually curious. What ensued was magical.
This wasn’t an ordinary series of technical talks. Several successful venture-backed brain technology companies shared their success stories and lessons learned. The presentations were not just slides and videos — embedded in the group were beneficiaries of the technologies, demonstrating them live. They shared their experience and how their lives had been changed forever, partially by addressing the group, and partially by mingling with the attendees one-on-one. During my time as a graduate student, brain technology demos took place under the supervision of technicians in a laboratory environment. Today, they were being showed off like smartphones.
The technologies discussed have broad implications, ranging from depression and obesity to physical performance and education to memory and rehabilitation. As a VC, I want to invest in a company disrupting a billion-dollar industry, rather than one that pursues a smattering of niche opportunities. In the past, many brain technology startups aspired to pursue fragmented academic and research markets. Others, like Neuropace, raised hundreds of millions to carry medical devices through regulatory approval. The opportunities described today were different. Initial applications were aimed squarely at the mass markets, many of which didn’t require arduous, expensive regulatory approvals. Potential products were well-defined, and paths to market were described in detail.
The question was raised as to whether the hundreds of millions of government dollars invested in brain technology has created fertile ground for a thriving brain startup ecosystem. Illumina and Applied Bio were cited as comparable examples by initially meeting huge demand in the biotech research community of their time. Given its implications in mental health, diabetes, and age-related diseases, few doubted that significantly more money will be poured into the brain space.
Going into the meeting, I expected the investors to walk away saying “cool stuff!” In contrast, it was “when can we sit down and talk about what we can do in this space together?” To my surprise, the meeting invoked a fear of missing out for many of the investors. The dawn of brain technology startups is upon us.
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