As the number of people diagnosed with Alzheimer’s and other forms of dementia grows, entrepreneurs have been stepping up to help with so-called “brain fitness.”
There are roughly 20 “brain fitness” companies around the world that either assess or sharpen mental acuity—not with drugs, but with software, according to
The breakthrough in cognitive fitness has been Nintendo’s Brain Age, a $20 computer game made for the Nintendo DS handheld system. Since the game’s 2005 debut, it has taken off like gangbusters. Its sequel, BrainAge 2, sold about 30 million copies as of late May.
Brain fitness is but a piece of a fast-expanding universe dubbed “neurotech” that features roughly 500 “brain tech” companies targeting a $2 trillion market, according to San Francisco-based consultancy
Brain fitness is just a small piece of the overall neurotech market, but it’s growing like a weed. Revenue from brain fitness companies jumped from $100 million in 2005 to $225 million last year, according to SharpBrains.
“I think [brain fitness] is going to grow rapidly,” says David Jahns, a managing director for venture firm
Besides Dakim, four other brain fitness companies have received venture or angel backing:
• Lumos Labs, which sells online games that it says will strengthen brain function for a $10 monthly subscription, raised $3 million in late May from
• Posit Science has raised $28 million in venture capital since 2003 from
• TeachTown, a Seattle-based company that offers computer-assisted treatments for children with behavioral and developmental disorders, has raised an undisclosed amount from the Washington Research Foundation and private investors such as Richard Fade, co-founder of the Autism Treatment Network.
I think [brain fitness] is going to grow rapidly. It’s certainly an area that needs attention given the significance of early onset dementia.
• And Vancouver-based Vivity Labs, which operates a brain fitness website with nine games, has raised $1 million from angel investors in recent months.
Like most startups, none of the brain fitness companies is offering anything rock solid in terms of barriers to entry, though some likely enjoy more protection from encroachers than others. “For companies like Lumos, the main barriers are brand, online execution and switching costs because you maintain your performance tracking numbers in their system,” says Alvaro Fernandez, CEO of SharpBrains.
Other startups are relying more on science. For example, Posit Science has been publishing clinical studies to prove the efficacy of its programs in helping patients with schizophrenia. Similarly, Dakim is scheduled to start clinical trials of its senior-care-focused software and hardware this fall.
Investors don’t appear to be too concerned about low barriers to entry because brain fitness companies require limited investment for what could be a huge return, says Fernandez. “When you compare it to the investment that biotech companies require, it’s a joke,” he says.
Little wonder that most of the companies in the space have met with or are sitting down with investors now. One of them is Applied Cognitive Engineering, which is co-located in Netanya, Israel, and Studio City, Calif. The company sells software—originally developed to train Israeli fighter pilots—to college basketball teams to help them hone their decision-making skills.
Another Israeli startup meeting with venture investors is 9-year-old CogniFit, which makes several different software programs, including Drive Fit, which it sells to insurance companies. DriveFit promises to advance driving skills, as well as determine who isn’t fit to be on the road. CognitFit also sells software called MindFit for aging customers and people recovering from brain-altering treatments such as chemotherapy.
Expect more brain fitness companies to get venture funding. Fernandez says he’s receiving “many more calls [from VCs] this year than last year,” and selling many more copies of SharpBrain’s quarterly report on the brain fitness industry. “This year, we’ve talked at length with 10 different funds,” he says. “I’d say we talked with half that many all of last year.”
Tim Chang, a principal at Norwest Venture Partners who sits on the board of Lumos Labs, says that searching out quality preventative health care opportunities has become one of a dozen areas of interest for him. “There’s a lot going on beyond mental fitness,” Chang notes. “Think gaming combined with physical fitness, consumer-driven nutrition, including through diet tracking and workout scheduling tied to your mobile.”
Some VCs advise caution for anyone considering investing in brain fitness, especially those who aren’t well-versed in the health industry. Amish Jani, a principal with Pequot who sits on the board of Lumos Labs, says: “Lumos leverages our knowledge in gaming and the Web, but it’s too soon to know if it expands beyond our current platform.” More to the point, adds Jani, “We’re not health care investors.”