China’s BrainCo is betting on wearable brain technology

Elon Musk’s Neuralink, which uses implants in people’s heads to compensate for disabilities, has become the poster child for so-called brain-computer interfaces (BCI). But some companies are betting that mass-market neural tech won’t require opening the skull at all.

BCI works by processing brain signals and translating them into commands, allowing external devices to be controlled with thought.

Startup funding in this field is part of the money flowing into artificial intelligence. But interest in the emerging field is growing as companies make breakthroughs, such as enabling people with degenerative conditions including amyotrophic lateral sclerosis (ALS) to type or play video games using brain signals.

AI is a catalyst, improving signal processing capabilities. Some in the industry envision another possibility one day: using the mind to control or communicate with AI and robots.

Technology escalates US-China rivalry. The Chinese government has included BCI as a strategic “industry of the future” in its latest Five Year Plan. Regulators recently approved what officials call the world’s first minimally invasive BCI device for commercial use, developed by Neural Medical Technology to restore hand function after spinal cord injury.

While companies including China’s StairMed and NeuroXess are pushing ahead with implants, the noninvasive field is booming — from Sam Altman-backed Merge Labs to China’s Gestala, both pursuing ultrasound-based methods.

BrainCo, one of the so-called “six little dragons” technology startups in the eastern city of Hangzhou, is making artificial and wearable devices using BCI technology.

Rui Ma, founder of Tech Buzz China media and research platform, said that although today’s proven applications of BCI can greatly improve the quality of life of severely disabled patients, the biggest market is in increasing people’s abilities.

But he added: “I don’t think anyone is even close to realizing that … . Addition is like sci-fi at the moment.”

Founded in 2015 and born out of Harvard Innovation Labs, BrainCo has planted its flag on the non-crazy side.

Implanted and non-invasive methods are different approaches to different problems, BrainCo partner and senior vice president Nyx told CNBC in a recent interview. Some conditions can only be solved by going into the brain, he said, but BrainCo believes that many others – especially where drugs are in short supply – can be provided by non-invasive methods that are easy for people to accept and access, with low risk and low cost.

The company’s bionic hands, approved by the US Food and Drug Administration, read an amputee’s nerve and muscle electrical signals and translate intended movements into finger movements. The wearables include a sleep aid BrainCo says uses low-voltage electrical currents to stimulate neurochemicals associated with stress relief.

BrainCo has raised 2 billion yuan ($280 million) in a funding round led by IDG Capital and Walden International, a company founded by Intel CEO Lip-Bu Tan.

The main challenge of non-invasive methods, according to He, is to detect and record brain signals, which are subtle and noisy when read outside the skull. BrainCo developed a dry electrode sensor to capture the signals and an AI algorithm to classify them.

He outlined the company’s roadmap in categories: start with those who need the most technology, such as prescriptions in underinsured markets; an increase in medical conditions such as ADHD and depression; and target a large market for consumer electronics.

Eventually, BrainCo plans to license its BCI platform to other companies that develop brain technology products — a business he expects to be the company’s biggest revenue driver.

The implementation plan is consistent with thinking from the national level. In a state press conference this week, a Chinese Academy of Sciences researcher specializing in non-invasive BCI outlined a similar trajectory: from medical applications in the near term, to use in autonomous driving and intelligent manufacturing, and finally to consumer products in the mass market.

Investors are divided on the best technology. But many agree the real test is whether companies can create products that offer clear improvements — and whether consumers will pay for them.

Some argue that only plants can deliver. “Non-invasiveness is like trying to capture light from distant galaxies,” said Alex Zhavoronkov, CEO of biotech company Insilico Medicine.

Others see promise in emerging uninvested strategies. Thomas Tsao, the founder of Gobi Partners, a venture capital firm that invested in Gestala, said that ultrasound-based methods provide a complete view of the brain without the risk of surgery.

Investment growth could help the industry reach its peak, Tsao said, but added its eventual market size is almost impossible to calculate, with many future use cases hard to imagine today.

Jefferies, in a July 8 report, said invasive implants and ultrasound-based methods represent “very promising” frontiers, noting that conventional non-invasive systems are often limited in their ability to accurately capture and interpret brain signals. But the bank added that BrainCo’s proprietary sensors, AI scoring algorithm and sales record give the company an edge.

Industry players say that the best method depends on the situation of use: recording or stimulating brain activity, aimed at patients or consumers, used briefly or continuously, directed at the surface or deep areas of the brain, and how much of a burden users are willing to bear.

If American neurotechnology is bankrolled by billionaires, China is backed by the central government.

In Beijing, the seven ministries jointly issued a plan for the implementation of the BCI industry in August last year, aiming for significant technological development by 2027. In June, the Anhui provincial government published an action plan to accelerate the development of BCI in all research, production and industries.

Some startups in China, facing pressure from government-linked or risk-averse backers to show revenue, have turned to selling equipment or consumer-grade products, said Ma of Tech Buzz China, while American investors are opting for “world-changing bets.”

Currently, China’s BCI market is pioneering non-invasive rehabilitation technology, said Jefferies, which faces relatively low regulatory and clinical barriers.

“China has now incorporated BCI into industrial policy services,” said Paul Triolo, a partner at communications firm DGA-Albright Stonebridge Group. “Beijing is not just thinking about looking at one technology, but the whole supply chain.”

The country’s focus is also broad, he said, from stroke rehabilitation to organ transplants to psychiatric evaluations.

That collaboration extends to hospitals and universities. Shanghai has integrated the implementation of BCI with Huashan Hospital, increasing access to patients and surgeons. China’s health authorities also created a separate BCI insurance division last year, which experts say could help boost the technology.

Like AI and semiconductors before it, BCI – with its sensitivity to personal data that is close to privacy – could become a geopolitical flashpoint as it grows. Performance enhancing applications also raise ethical considerations.

BrainCo’s said the company does not collect customer data, which is stored on users’ devices, not transferred to the cloud and deleted after each use. Information such as concentration points can be stored locally on training devices, he said.

Asked about the tension between the world’s two technological powers, he brushed aside politics.

He said the company’s goal is to bring solutions to those who need help, whether in China or the US “I don’t think I’ll stop at the borders for that.”