5 Mistakes Companies Will Make as Neurotech Goes Mainstream

Why the rush to commercialize brain-computer interfaces is setting up businesses for spectacular failures

The neurotech gold rush is here, and companies are making the same mistakes that killed entire industries before them. 🧠💥

The broader neurotechnology sector is expected to climb from $15.77 billion in 2025 to nearly $30 billion by 2030, while $4.8 billion across 140 deals flooded the market in 2025 alone. But here’s what the glossy investment decks won’t tell you: most of these companies are walking straight into predictable disasters.

I’ve watched this pattern play out in emerging tech for years. The same five mistakes keep crushing promising startups, and neurotech companies are already making them at scale.

The NeuroTech bubble fears of 2023-2024 are giving way to rational valuations based on actual milestones, but that just means the real casualties are starting to pile up.

The difference this time? When you’re dealing with people’s brains, the stakes aren’t just financial—they’re deeply personal.

In 2020, Second Sight collapsed, ceasing support and leaving users with non-functional, irremovable implants. Some described their devices as electronic debris in their bodies.

Here are the five mistakes that will separate the winners from the wreckage.

They’re treating neural data like any other dataset

This is the big one.

A 2024 Neurorights Foundation audit of 30 consumer neurotechnology companies found that 96.7% of companies reserve the right to transfer brain data to third parties.

That’s not just bad practice—it’s corporate suicide waiting to happen.

Neural data isn’t like your browsing history or shopping preferences.

It can provide insights on an individual’s thoughts, memories, emotions, biases, attention, preferences, or intentions. Essentially, it could allow the public and institutions, including the government, to access your mind.

When consumers realize what they’ve signed away, the backlash will be swift and merciless.

Companies are sleepwalking into a privacy nightmare because they’re using the same data governance frameworks they’d use for a fitness app. Here’s what smart companies are missing:

The FDA’s guidance on cybersecurity protections for medical devices does not apply in the context of commercial neurotechnology applications because those are typically categorized as consumer electronics rather than medical devices. This leaves a significant gap in protections for consumer neurotechnology products.

Colorado and California enacted the first U.S. state privacy laws governing neural data, and at least six other states are following suit.

Chile’s pioneering 2021 constitutional amendment protects “cerebral activity and the information drawn from it” as a constitutional right. This amendment led to a 2023 unanimous ruling by Chile’s Supreme Court ordering a company to delete a consumer’s neural data.

The regulatory landscape is shifting fast.

Democratic Senators Chuck Schumer, Maria Cantwell, and Ed Markey called for an investigation into neurotech companies’ handling of user data, ringing the alarm bells that some deeply sensitive and personal information may be getting sold.

Companies that don’t get ahead of this will face class-action lawsuits that make Cambridge Analytica look like a parking ticket. 🎯⚖️

They’re over-promising on capabilities that don’t exist yet

The marketing departments have lost their minds.

Many of these increasingly popular products aren’t fully supported by science and have little to no regulatory oversight, which poses potential health risks to the public.

I keep seeing startups claiming their EEG headbands can “unlock your cognitive potential” or “read your emotional state with 90% accuracy.”

That’s the primary problem with neuromarketing: there are no hard answers. While brain imaging can show a correlation between a mental state and brain activity, it can’t prove causation. It’s impossible to measure which responses are a direct result of marketing or brand images, and which aren’t. Because of this limitation, neuromarketing can’t provide the solid answers about consumer behavior that companies hope to get.

The science simply isn’t there yet for most consumer applications.

While some of these techniques are used in clinical and research laboratory settings, many consumer-grade versions of neurotechnology devices are only loosely based in science. It is unclear whether the laboratory data collected to test them is applicable to consumer-grade products.

This overpromising creates three massive problems:

• Customer disappointment: When your “focus-enhancing” headband doesn’t actually help users concentrate better, they don’t just return the product—they become vocal critics

• Regulatory scrutiny: Currently, most of the regulatory burden for consumer neurotechnology falls to the FTC, which has the authority to act on claims of false advertising. However, with thousands of health and wellness apps and devices, that oversight is ill-suited to monitor and regulate the industry effectively

• Scientific credibility damage: For many actors, ethical behavior corresponds to avoiding overpromising and instead rather letting their products stand out based on their scientific soundness. Several interviewees approach this topic from a position of defensiveness in a Silicon Valley-centric sector that has been shaken up by some ‘bad apples’ in recent years. The prominent Theranos case serves as a key reference point for the field

Remember Campbell’s soup?

Campbell attempted to use neuromarketing to boost its falling soup sales in 2008. The brand worked with several neuromarketing service providers and decided it needed to redesign its soup labels. However, brands that switch up labels with decades of recognition behind them rarely fare well, and Campbell was no exception. Even though the decision was based in neuromarketing, it was a striking flop. 📉🍅

Smart companies focus on what their tech actually does today, not what it might do someday.

They’re ignoring the abandonment problem entirely

This is the existential threat nobody wants to talk about.

BCIs and other neurotechnologies face a critical vulnerability: abandonment. Companies may shut down, research funding may lapse, or technology may become obsolete, leaving patients without support, updates, or device maintenance.

What happens when your neurotech startup runs out of money? Unlike most software companies, neurotech firms often have users with devices implanted in their bodies or people dependent on their systems for medical management.

In 2021, Ian Burkhart underwent surgical removal of his brain implant after nearly seven years of groundbreaking use. His device had allowed him to move his hand using thought alone. But when the study ended and funding ran out, there was no pathway to continue using the technology outside the research setting. Despite being medically stable and still functional, the device had to be explanted due to regulatory and logistical constraints.

The abandonment problem creates multiple business risks:

• Legal liability: What’s your responsibility to users when you shut down?

• Reputation destruction: The Argus II case highlights the dangers of failing to mandate long-term support for neurotechnology manufacturers

• Regulatory backlash: Governments are watching this issue closely and will regulate accordingly

Companies need long-term sustainability plans from day one. Not just for profitability, but for user support. Some are exploring insurance models, escrow accounts for user support, or partnerships with larger firms to ensure continuity. 🛡️💼

They’re blurring medical and consumer lines without understanding the consequences

Here’s where companies get into serious trouble.

Concerns may arise due to the similar claims associated with both medical and consumer devices, the possibility of consumer devices being repurposed for medical uses, and the potential for medical uses of neurotechnology to influence commercial markets related to employment and self-enhancement.

You can’t have it both ways. Either you’re making medical claims (and need FDA approval) or you’re a consumer wellness product (with much lighter regulation). Companies keep trying to straddle this line with vague language like “supports brain health” or “optimizes cognitive function.”

The wellness industry, including neurotechnology devices like Muse, largely operates on the precarious tightrope of medical-sounding benefits and lifestyle enhancements. The market propagates its products as important for well-being without the necessity that might encourage insurance to at least recognize hefty costs. The ethical implications of making health-improvement promises at steep costs reinforces inequitable systems.

This strategy creates multiple failure modes:

• Regulatory confusion: If your device starts being used medically, you may suddenly need different approvals

• Legal exposure: Medical-sounding claims without medical backing invite lawsuits

• Market positioning problems: You’re competing with both medical devices AND consumer gadgets, often losing to both

Pick a lane and own it. If you’re medical, get proper approvals and charge medical prices. If you’re consumer, be clear about limitations. 🎯⚕️

They’re treating this like any other tech sector

The biggest mistake is cultural. Neurotech isn’t just another SaaS platform or mobile app.

Consumer-oriented devices generally are not subject to the stringent safety and efficacy regulations that govern medical applications, nor do they require clinical trials. This allows them to innovate, enter the market, and reach more users more quickly and with fewer resources – provided they refrain from making any medical claims. Naturally, this new ability for the neurotech industry to, as the Silicon Valley motto puts it, ‘move fast and break things’ comes with its own set of risks.

“Move fast and break things” doesn’t work when you’re dealing with brains.

Some consumer neurostimulation devices may pose dangers, such as skin burns. There are also potential psychological harms from many consumer EEG devices that purport to “read” one’s emotional state. If a consumer EEG device erroneously shows that an individual is in a stressed state, this may cause him or her to become stressed or to enact this stressed state, resulting in unwarranted psychological harm.

Silicon Valley culture emphasizes rapid iteration, minimal viable products, and learning from failures. But in neurotech:

• Failures have serious consequences: A buggy brain interface isn’t like a crashed app

• User trust is fragile: Consumers typically accept that their purchase behavior is public, but they think of their brains and thoughts as private, which can lead to backlash against organizations that use neuromarketing tools.

• Regulatory cycles are long: You can’t patch your way out of FDA requirements

The companies that will survive are those building with the gravity this technology deserves. That means robust testing, conservative claims, transparent data practices, and deep respect for the fact that you’re working with the most intimate technology humans have ever created. 🧠🔒

Want to know which neurotech companies will still be here in five years? Look for the ones addressing these five areas systematically, not the ones raising the biggest rounds or making the boldest promises.

The brain-computer interface revolution is inevitable. But most of the companies trying to lead it are making mistakes that will kill them first. Don’t be one of them.

What concerns you most about the rapid commercialization of neurotechnology? Are we moving too fast, or is this the natural evolution of technology meeting human potential?