Neuralink – Page56 Capital, LLC initial analysis (not investment advice, for informational purposed only)

Opportunity details: $2 million to $5 million in secondary direct shares are available in Neuralink.

Neuralink is a neurotechnology company that was founded in 2016 by Elon Musk (as a co-founder) and it is
developing implantable brain–computer interfaces (‘BCI’s) that aim to link human brains directly to computers.
The company is developing ultra-high bandwidth brain-machine interfaces to connect humans and computers. It intends
to help people with paralysis and its interface will help in treating and diagnosing neurological issues.
Neuralink is working to find ways to increase humans' intelligence to equal that of the AI programs of the future. Such
a device is expected to help people combat existential threats from AI and it would allow humans to engage in what
Elon Musk called ”consensual telepathy.” The real emergence of AI technology has potentially begun, and the
time to get in might already be upon us.
Neuralink has the potential to revolutionize how humans interact with digital devices and computers by allowing a user
to use their own thoughts as inputs. Elon Musk once described Neuralink as a “Fitbit in your skull, with tiny
wires”. The company is trying to take consciousness from a field of
philosophy in the 20th century to a field of science and engineering in the 21st
century. Neuralink’s stated overarching goal is to create a generative input
and output device capable of interfacing with any part of a user’s brain. In the
short-term, the company is focusing its tech. on helping people with
disabilities regain motor control or potentially even restore (enable) vision.
Neuralink’s overarching goal is to integrate with humans to radically increase
efficiency and stay relevant in an age of supercomputing AI.
The inspiration behind the company was a science-fiction concept called
neural lace. This formed part of the fictional universe in Iain M. Banks' series Neuralink in brain illustration
of novels The Culture.

Current Neuralink goals:

1) Restore or enable vision (even in those who have never had sight).
2) Restore full body functionality for those with spinal cord injuries.
3) Neuralink’s long-term goal is to reduce AI risk to humanity.

Neuralink technology
Neuralink is developing a technology called ‘neural lace’ that aims to allow the brain to communicate with a computer
without having to physically interface with it. Neural lace involves implanting electrodes in the brain so that people can
one day upload or download their thoughts to or from a computer.
Neural lace. This will be a brain-to-computer interface technology
that (it is hoped) will enable humans to keep up with the rapid
development of AI (see ChatGPT as an example). It is being
designed to connect to thousands of neurons within the brain.
Neural lace is expected to effectively be an ultra-thin mesh that
will be implanted in the skull and it will form a body of
electrodes that will be able to monitor a human brain's
function. The neural lace will integrate itself with the human brain.
Device details. The current version of the technology is called N1
Link. It is a 1024 channel device that Neuralink is developing for N1 Link: sealed, implanted device that processes and
therapeutic use and once the device is implanted into a patient’s transmits neural signals.
brain, it is expected to invisibly transmit data via a wireless
connection. Neuralink has yet to implant the device in humans (FDA approval to begin trials is expected to occur later
in the year). Neuralink has demo’ed the outcome of a successfully implanted N1 Link in a video featuring a Macaque
monkey playing Pong with his mind. The device contains a battery that can charge wirelessly.
Precision automated neurosurgery. The threads on the Link are so fine and flexible that they can’t be inserted by
the human hand. Instead, the company is building a robotic system that is being designed to insert the threads precisely
where the neurosurgeon wants them to be.

Highlights
Elon Musk. He is a co-founder and the majority shareholder of
Neuralink (however, he is not currently working at the company
as an executive). While not running the day-to-day operations
of the company, Musk continues to play an outsized role in the
company and during a recent (open to the) public company
update (in the fall of 2022) he even pledged to get a Neuralink
brain implant implanted into his brain during a future near-term
demonstration.
More so, the company squarely fits into ‘The Elon Musk
Company Formula’ that has proven very successful multiple
times in the past. The Formula starts with an end-state that
increases humanity's chance of having a good future and works
backwards until the company gets to a business model that
funds an innovation that ignites an industry. In each case,
something is in the way at the beginning, some technical limitation.
Valuation (also a consideration, see below). The most recent round of financing was raised at a post-money
valuation of $2.1B (raised approx. 18 months ago) and the current secondary seller is seeking a share price that implies
a valuation 2x-3x higher than the last round and it is still relatively early in the company’s existence. However, as they
hit further milestones, the valuation is expected to continue to rise rapidly. More so, Neuralink is currently
underestimated and underappreciated by the market (compared to other more well-known players including OpenAI).
Six months away from human testing (however, still require FDA approval to begin human trials). If successful,
their technology is expected to be multiple times better and safer than current treatments. During the fall 2022 Neuralink
Show and Tell, Elon Musk stated that the company is approx. six months away from launching human trials.
OpenAI and Paul Graham/Sam Altman. Elon Musk was a co-founder of OpenAI (but he stepped down due to potential
conflicts of interest between OpenAI and Tesla) and both companies (Neuralink and OpenAI) share office space and
have a number of overlapping shareholders (including Sam Altman, CEO of OpenAI). OpenAI started out as a non-
profit and then quickly went for-profit (still owned by the same players).
Jan. 2023 update: Microsoft is currently in discussions to invest $10 billion into OpenAI at a valuation
of $29 billion in an attempt to launch an alternative search engine to Google (+ launching ChatGPT
integrations with their Office suite of products as well as Bing).
AI applications. Neuralink’s AI-augmented devices generally fall into one of four categories, including: 1) implanted
medical devices adapted to stimulate and record neurochemical activity, 2) software to facilitate control of the device
and the brain, 3) methods for treating neurological impairments and 4) methods for communicating thoughts between
human brains.
Metaverse + Neuralink (Elon Musk ultimately thinks Neuralink will be better than the metaverse in the long-
term). Offers an investor exposure to the metaverse, in a very crowded market (there are over 500 companies
focused on building some aspect of the metaverse). A Neuralink metaverse is projected to be a far more immersive
metaverse than currently envisioned metaverses because the data will be directly fed to your brain (opposed to using
a wearable device) and a user’s presence would feel exactly the same as in the real world.
Elon Musk quote on the current state of metaverse hardware. "It gets uncomfortable to have this thing strapped to
your head the whole time, I think we're far from disappearing into the metaverse." He then offered what he sees as a
far better alternative: a chip surgically implanted in your brain. "Long term, a sophisticated Neuralink could put you
fully, fully in a virtual reality thing." Neuralink will have the device and technology at the neural level, while todays proto-
metaverse relies on the limited capabilities of today’s software and hardware technology. While there remains the
possibility of a near-term metaverse integration on Neuralink for now the company is focusing on Neuralink’s medical
applications.
Top-tier investor base. Investor base includes top-tier VC funds including Founders Fund, GV (formerly known as
Google Ventures) and GigaFund. Sam Altman and Paul Graham (also OpenAI). Elon Musk funded the company with
approx. $150mm prior to the company raising outside funding.
Top-tier management team. The team includes executives that are at the top of their fields, however, Elon Musk is
notoriously tough on his executive management teams and the company has seen several executive departures
recently. Elon Musk personally interviewed over one thousand candidates in order to find the right team to lead
Neuralink and he continues to make tweaks to the team as he finds the right fits.
Neurotech product TAM. The overall worldwide market for neurotechnology products will be $10 billion in 2022 and
is projected to reach ~$20 billion in 2026, representing a CAGR of 12% in the forecast period. Major growth drivers
are being driven by rising health disorders, growing geriatric population, growing research and development activities,
and technological advancements.
Patent portfolio. The IP of Neuralink includes a total of 35 patents globally.
These patents belong to 10 unique patent families and 27 of the 35 patents
are currently active.
Liquidity. The liquidity of secondary shares for companies founded or run
by Elon Musk have been very active on the secondary market and they are
generally very liquid.
Binary return outcome likely (including the potential for 100% loss of
invested capital). The returns for this investment have the potential to
return either 0.0x invested capital or a potential homerun and it is unlikely
that there will be any in-between outcomes.
Vast, diversified use cases makes the TAM very large (and continuously growing). While the company is initially
focused on healthcare use cases, when fully developed, it could also be used for things like 1) communicating with
loved ones, 2) searching the Internet and interacting directly with AI (as a potential replacement for the Google search
engine), 3) operating system (as a potential replacement for the iOS operating system), 4) it could even replace your
television, streaming content straight into your brain or 5) work as an AI assistant that can see into a user’s body using
wearables.
What else can Neuralink do? Robotic limbs, Cochlear implants, alleviate symptoms in diseases like Parkinson’s and
machinate menial jobs. Neuralink is a technology that maps brainwaves to thoughts similar to humans and other
animals like cats, dogs, and dolphins. With Neuralink, humans could better understand and communicate with their
pets, leading to more fulfilling relationships and better care for animals.
Substitute for current labor. Elon Musk quote: “Human beings are basically cyborgs already – we always have a
device (cellphone) within arms reach that is capable of answering any question, communicating with anyone in the
world, capturing and storing an infinite amount of memories and doing so much more. The only problem is that the
bandwidth between us and our phone is too slow – specifically, the input bandwidth.”
Considerations
Latency. A current major limitation to Neuralink’s technology is latency (the rate at which one can send and receive
data). Current hardware technology will need to see marked improvements before the company’s plans for their
technology can be fully realized.
Elon Musk. Negatives here include the fact that he is a highly polarizing figure
and public/government’s current target number one: in the last 2 months (as of
Jan. 10, 2022), the Feds have launched investigations into Neuralink, Tesla and
Twitter.
Federal probe into animal treatment. A small but vocal group is currently
campaigning against the company’s potential FDA approval for human trials
due to the alleged mistreatment of animal test subjects.
Key employee departures. Over the past 18 months, co-founder and president
Max Hodak and co-founder Paul Merolla have both left the company. As of 2022, only two of the eight cofounders
remain at the company. However, executive departures seem to be par for the course at Elon Musk’s companies.
Mitigant: in the past, this model of leadership has generated extremely outsized returns for many of Musk’s
companies (although there is no guarantee of such an outcome here).
Repeated delays + risk of continued delays. Neuralink has a history of running behind schedule and it has been
reported that Elon Musk recently expressed frustration to Neuralink employees over their slow progress. The long-
term health effect of using artificial electrical signals to control the brain remains unclear and could potentially
warrant more clinical research.
Successful deal closing likely means having to move/close quickly. Need to move quickly to close on any available
secondary shares, as they are in high demand right now.
Current market conditions. We are likely just exiting a recession (as of Jan. 2023) so there still remains lots of
uncertainty and potential ‘black swan’ events. As investors with a long time horizon, we are not impacted by short-term
company or overall market setbacks.
Competitors. There are other brain implantable devices currently being researched such as the BrainGate Neural
Interface System. These devices are composed of large boxes, wires and spikes that are inserted with an air hammer.
Another competitor, Precision Neuroscience is developing a thin, flexible brain implant for paralysis that lays on top
of the brain and could be installed through a small slit in the head. The company has tested its device in pigs and is
hoping to get a green light from the FDA in 2023. Science Corp. (working on restoring eyesight in people with retinitis
pigmentosa and dry age-related macular degeneration).
Mitigant: these companies aren’t really true, direct competitors and we are hopeful that there is room in the
market for multiple winners.
Execution risk. The company is still very early in attacking its visions/goals so execution risk is still high and, while
Neuralink currently has a small edge over its competitors (particularly in the AI space), the company will need to
continue to innovate to stay ahead. They are working to refine their technology and still testing on animals; however,
they are planning to begin experiments with humans in late-2023. However, detractors use the fact that researchers
have been developing BCIs since the 1960s, but the devices are still considered ‘experimental’ and none are
commercially available today (only a few dozen people around the world have been outfitted with these interfaces as
part of research studies).
The company hasn’t received FDA approval for human trials yet, but the timing is said to be within the next six
months (from Dec. 2022, so six months is May 2023). Once the company receives FDA approval for human
trials, the secondary share price of the company’s shares is likely to increase substantially.
Valuation. For the current stage of the company/number of milestones they have hit, the ask price for the secondary
shares (still TBD but the ask might be 2-3x the last round of financing’s post-money valuation) is higher than similar
companies at a similar stage.
Neuralink as a threat to privacy and security. A common concern about a computer chip in the brain is that the
digital world is now invading the last remaining sanctuary of privacy (the brain). Your phone already knows everything
about you, but at least your thoughts are safe…. for now. There are also broader areas of ethical concerns, namely the
societal impacts of the technology (who owns the data, and who gets to decide what data goes into the brain?), the
potential danger that individuals might use artificial implants against others without their knowledge or consent, or
governments could use them against their citizens without notice or recourse.
Binary return outcome likely (including the potential for 100% loss of invested capital). The returns for this
investment have the potential to return either 0.0x invested capital or a potential homerun and it is unlikely that there
will be any in-between outcomes.
Low probability of a successful outcome. Several neuroscientists and publications, including the MIT Technology
Review, have been critical of claims made by Elon Musk about Neuralink, calling some of the technological promises
"highly speculative". Though BCIs have existed in research for decades, major technical challenges remain,
including: the invasiveness of the interface is high. The implant requires neurosurgery and a constant, hardwired
link into the brain (Neuralink’s devices charge wirelessly). The bandwidth of the systems is also low. We have
billions of neurons but BCIs only record a few neurons at any given time. This makes using them for any high-fidelity
system difficult.
Cash burn/access to additional capital. With Elon Musk’s highly publicized purchase of Twitter and the decline in
Tesla’s stock price, it remains unclear if he has the remaining resources to continue to fund the company.
Mitigate: Neuralink began raising outside capital in July 2021, so they have already proven their ability and
willingness to raise outside capital.

Potential returns analysis

Potential returns analysis (for illustrative purposes only, subject to change and there is no guarantee of
positive returns from this investment)

This document does not constitute an offer to sell any securities in any of the companies identified in this document.
As such, this summary does not contain all information that a prospective investor may desire in evaluating an
investment in the securities of any of the identified companies. Each prospective investor must rely on his or her own
examination of each Company and the terms of the offering, including the merits and risks involved in making an
investment decision with respect to the securities. Prior to making an investment decision, a prospective investor should
consult his or her own counsel, Accountants, and other advisors and carefully review all information available.
All Company specific information provided herein, including comparisons of the Company’s products or services to
competitive products or services, unless otherwise cited, were provided by Company staff or publicly available press
and research sources, and have not been independently verified. Further, any comparisons with competitors are
intended exclusively to delineate the Company’s competitive differentiation in the marketplace and in no way should be
considered a comparison of potential investments. Additionally, Some of the statements in this Document are “forward-
looking statements.” These forward-looking statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance, or achievements to be materially different
from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking
statements. These factors include certain risk factors that are described in the Offering Document, as well as other
documents furnished to potential purchasers. In some cases, the recipient may identify forward-looking statements by
terminology such as “may,” “can,” “will,” “should,” “could,” “expects,” “plans,” “believes,” “estimates,” “potential,”
“intends,” “continue” or the negative of these terms or other comparable terminology. Although the expectations
reflected in the forward-looking statements are believed to be reasonable, no guarantee of future results, levels of
activity, or performance is given.