The Brain Trade

Public markets were largely flat this week, with the S&P500/Nasdaq100 +0%/+1%. On 6/5 the ECB announced a ¼ point rate cut to 2%, partially in response to uncertainty over US trade policy. TSLA shares were down 14% on 6/5 after the Trump administration threatened to revoke contracts with Elon Musk companies, of which we believe SpaceX is the most exposed. Since 4/2 Liberation Day the S&P500/Nasdaq100 are now +5%/+10%. Our NPM Private Market Tracker*, which shows the estimated average price performance of the 170 largest names in our internal Tape D® data, is +8% over the same period.

In this week’s Private Markets Weekly, we wanted to discuss the emerging brain computer interface (“BCI”) industry. BCI companies, such as Neuralink, Precision Neuroscience and Synchron, have been attracting interest in private markets over the past year. Most notably, Elon Musk backed Neuralink completed a $650mm financing last week at a $9bn valuation, a +256% increase from the prior round in 11/2023. The second largest BCI player, Precision Neuroscience raised $155mm in 12/24 at a $520mm valuation. Synchron most recently raised $75mm in 12/22 at a $385mm post money valuation. (Source: Pitchbook)

What is a brain computer interface? BCIs are an emerging category of implants that allow patients to control computers with their brains. While this objective may sound straight out of a science fiction movie, the basic functionality has been shown to work. However, due to the design challenges of any apparatus meant for long term implantation in the body – and the various regulatory approvals required – we believe the industry is still several years from first commercial applications. Having said that, the BCI companies are enjoying a market “moment” given the size of the potential TAM.

Initially, most BCI companies will explain that the focus of their devices is to assist paralyzed or other patients lacking the motor skills to control computers. In a report published 10/24 (“The Next Big MedTech Opportunity?”), Morgan Stanley estimated the addressable market in the US alone at ~$400bn. Additionally, longer term, there remains the potential for BCIs to be used to enhance efficiency for otherwise healthy people.

We would also note that we do not view BCI as a “winner take all” market. Each of the companies in the industry appears to be taking a slightly different approach, and each approach may end up being better for a certain type of patient.

BIGGEST MOVERS AND TOPICAL NAMES

Based on our proprietary Tape D® data, the best performers in the private market since the 4/2 “Liberation Day” have been OpenAI (+46% estimated share price performance), x.AI (+42%) and Anduril Industries (+37%).

RECENT EVENTS

• Amazon plans to test humanoid robots for potential package delivery. (6/4; The Information)
• Meta agreed to buy all power offtake from a Constellation Energy nuclear power plant in Illinois beginning in 2027. (6/3; TechCrunch)
• The Trump administration banned major semiconductor design software companies from selling to China. (5/29; StrictlyVC)

NOTABLE CAPITAL RAISES

• Anduril raised $2.5bn at a $30.5bn valuation. (6/5; Bloomberg)
• Anysphere, the maker of AI coding assistant Cursor, raised $900mm at a $9.9bn valuation (6/5; Bloomberg)
• xAI is seeking to sell $300mm of shares at a $113bn valuation. (6/2; Reuters)
• AI search firm You.com in talks to raise equity at a $1.4bn valuation. (6/4; The Information)
• ClickHouse raised $350mm at a $6.35bn valuation (6/2; Pitchbook)
• Insurtech firm Bolttech raised $147mm at a $2.1bn valuation. (6/2; Pitchbook)

NOTABLE EXITS

• Stablecoin issuer Circle indicated a potential valuation of $7.2bn for its upcoming IPO in an updated SEC filing (6/2; Coindesk)
• Space and technology company Voyager Technologies updated pricing in its IPO filing to indicate a $1.6bn potential valuation. (6/3; Crunchbase)