Michael Berk, MD, PhD

Our brains are arguably our biggest assets as individuals and communities. However, standards of care and access to solutions for brain challenges are woefully inadequate. Our environment can be harmful to our brains, such as through air pollution and nano-plastics in our food and water, as well as trauma and negative psychological effects from social media. Moreover, the neuroscience innovation market to “fix” these issues is often riddled with perverse incentives. We need a new model to link brain-based innovation with economics—a disciplined approach, methodology, and set of services for accelerating responsible innovation. We need a Brain Capital Foundry.

As a society, we clearly have many brain challenges.

 These span from mental health to neurological and substance use disorders. Current prevention, screening, diagnosis, and treatment solutions are inadequate and often inaccessible, being out of reach for millions. Further, social media platforms can amplify anxiety and drive disinformation-driven radicalization and confusion. Innovative solutions and systems can face serious obstacles when placed in opposition with at times more efficient short-term approaches that often are rewarded by capital markets (eg, short-term profit motivations of venture capitalists and their limited partners).

Brain challenges are currently seen as externalities to the economy.

 Other pseudo-externalities include viruses and climate change. However, we now appreciate that viruses and climate extremes can and will impact our economy. Brain challenges reduce our brain performance and disrupt societal flourishing, ranging from trillions of dollars in lost productivity to despair and discord within communities.

 This is why we developed Brain Capital, a novel economic measure that integrates brain health and brain skills.

 We seek to place Brain Capital at the center of economic models and solutions in the current brain economy.

We are engaging with the economics of new solutions for brain disorders.

 We previously wrote that conventional venture capital models, led by financiers, can be inimical to the brain innovation market.5Theme-based funds, venture studios, or related integration may not adequately mitigate the financial incentives driven by the expectations of both limited partners and fund managers to force-feed unicorns with money to either 1) grow irresponsible brain health solution businesses for more pure profit motives or 2) grow businesses that can damage brain health. The ultimate mission and focus of each of these investors is to maximize the exit price for these companies, thereby incentivizing short- and medium-term financial results versus longer-term societal brain health. The behavior of company leadership and associated markets feeds off those drivers. Behaviors up and down the supply and demand chain can continuously reinforce these financially successful companies.

Most social media platforms are designed to hijack cognitive processes and evoke emotional responses to attract, capture, and retain their users’ attention. Social neuroscientists have modelled these processes to show how the brain handles social information and to explain how basic reward circuits in the brain use this information to influence decision-making.

 The real-time data collected and used by social media algorithms means that platforms are constantly fine-tuning their methods and content to get the most possible user attention and consequent advertising returns. Competition for users’ time is heating up. The attention economy is not just about grabbing advertising dollars; these platforms are competing to hijack basic biological functions.

The CEO of Netflix joked in 2017 that they are not competing against other platforms—their real competition is “sleep.”

 Although this was a quip at an industry conference, it needs to be taken seriously; it is true that individuals in developed countries are indeed sleeping less, and this is associated with worse mental health. If attention economies are focusing on holding onto users’ attention at the expense of basic biological and social behaviors that contribute to health and well-being, the long-term consequences will be profoundly damaging.

We believe a wholesale brain capital-based economic reengineering is needed. We must attack this issue from convergent perspectives. To this end, we suggest a Brain Capital Foundry, which specifically aims to create and integrate neuroscience advances, policy, diplomacy, economic theories, responsible innovation, as well as the development and deployment of financial instruments. This foundry creates a disciplined approach, methodology, and set of services for accelerating innovation. A graphical overview of this structure is listed in the 

. There are also several key examples of Brain Capital Foundry structures (

We urgently need a new economic model for a brain economy that prioritizes one of our most important societal assets: our brains. Careful work is required to knit together neuroscience-inspired innovations, policy, diplomacy, economics, responsible innovation, and finance. We hope this blueprint is helpful to stimulate further refinement and action.

 is an Atlantic Fellow for Equity in Brain Health at the Global Brain Health Institute (GBHI) at the University of California, San Francisco (UCSF) and Trinity College Dublin; a Thiel Fellow at Stanford University; and a Steering Committee member for the OECD Neuroscience-inspired Policy Initiative (NIPI, in collaboration with PRODEO Institute and supported by the Meadows Mental Health Policy Institute [“The Meadows Institute”]). 

 is an assistant professor in neurology at Oregon Health and Science University. He is a Senior Atlantic Fellow for Equity in Brain Health at GBHI. 

is director of IMPACT, the Institute for Mental Health and Physical Health and Clinical Translation at Deakin University. He is an honorary professorial fellow with The Florey Institute for Neuroscience and Mental Health, ORYGEN Youth Health, The University of Melbourne’s Department of Psychiatry and the Department of Public Health and Preventive Medicine at Monash University. 

is a general partner at Newfund, a cross-Atlantic early-stage firm with investments in health, mental health, edtech, and foodtech. Newfund partners with Fondation Fondamental for the launch of Heka, the first of a new generation of VC funds focused on mental health.

 is cofounder of The Hackett Center for Mental Health Policy and former chair of the Federal Reserve Bank of Dallas. 

 is the John S Dunn Sr. Presidential Distinguished Chair, founding chair of Systems Medicine and Bioengineering Department, director of T.T. & W.F. Chao Center for BRAIN, and associate director of Houston Methodist Cancer Center, Houston Methodist. He is a professor of radiology, neuroscience, pathology, and laboratory medicine at Weill Cornell Medicine.

is head of the OECD New Approaches to Economic Challenges Unit, senior advisor to the OECD Secretary General, and co-lead of OECD NIPI. 

is CEO and president of The Meadows Institute. 

 is a specialist in frontier technologies, investing, and philanthropy strategy. She is a commissioner for the California 100 Initiative. 

 is a general partner at IOVC, where she focuses on early-stage venture investments in Silicon Valley with a focus on future of work and enterprise/SaaS. She is also on the faculty at UC Berkeley and Singularity University, and is appointed by California Governor Gavin Newson to serve as 1 of 13 voting members on California's Mental Health Commission (as the first Asian-American commissioner), which includes overseeing ~$2.6 billion annually in state budget and advising the governor and the legislature on mental health policy. 

 is co-lead of the OECD NIPI, founding steering committee member of Brain Health Nexus of Cohen Veterans Bioscience, strategic advisor to Heka, member of the Davos Alzheimer’s Collaborative Champion’s Cabinet, advisor to the Texas Medical Center Innovation Institute, senior fellow with The Meadows Institute, instructor with GBHI, and adjunct with IMPACT at Deakin University, the Baylor College of Medicine Department of Psychiatry and the University of Texas Health Sciences Center at Houston.

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A brain capital grand strategy: toward economic reimagination

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Convergence Mental Health: A Transdisciplinary Approach to Innovation

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Articles

How can this new model help us link brain-based innovation with economics?

Brain Capital Foundry: Accelerating Responsible Innovation

As brain health investing sees unprecedented growth and activity, how do we ensure a sustainable rate of progress going forward? An editorial in 

reported that “In 2019 alone, venture capital (VC) companies invested a record-breaking $637 million in more than 60 different mental health-oriented companies.”

 This has accelerated further in 2020 and 2021.

 The whole VC field is booming, and beyond just mental health care, investment in the broader field of brain health science and technology is also on the rise.

There is a good reason for this: Brain health technologies are essential clinical tools for addressing the global brain health pandemic and its multiple social and technological changes.

 These technologies—spanning omics, digital therapeutics, artificial intelligence, and devices—aim to improve access, screening, prevention, diagnosis, and treatment. There is an increasing convergence of these types of solutions as clinicians, health systems, and payors attempt to simplify clinical workflows and minimize fragmentation of new products and services (

With investment in brain health growing so quickly, it is easy to be optimistic about the current and future state of the field. Recent societal trends reinforce the ostensibly rosy picture. The COVID-19 pandemic accelerated the destigmatization of mental illnesses and highlighted the importance of brain health to the public.

 Similarly, the pandemic has unveiled as never before intrinsic connections between mental and brain health, economy, innovation, and wellbeing.

 It is crucial, though, that we do not take progress for granted and rest on our laurels. It is also critical that we take a responsible approach to this field, which is very vulnerable to hope (due to the dire suffering and intense want for relief) and hype (due to major business opportunities).

Indeed, the stakes are too high. Given the multi-trillion-dollar costs of mental health disorders, the poor standard of routine care, and the projected rises in prevalence and economic burden of mental health disorders in the coming decades, 

 The show must go on! In order to protect and reinforce the vibrant brain health ecosystem, we must anticipate risks of market failure and work to proactively mitigate them. We wrote about this 

; however, this article is a much more extensive thesis and set of recommendations.

) is a graphical depiction of a common pattern that arises with each new technology or other innovation.

 It represents the maturity, adoption, and social application of specific technologies (

). We believe the Hype Cycle is relevant to the frontier brain health technology field and can provide a cautionary tale for the field.

Risks for the Frontier Brain Health Technology Field

We are seeing signs of “Peak of Inflated Expectations” in this field. There are regular news articles touting the rising rates of VC investment, which have helped create a record number of brain health “unicorn” companies (companies valued over $1 billion).

 Concerns have been raised over the emergence of public disclosure of speculative valuations and seemingly inflated valuations (for instance, the digital therapeutics company Pear Therapeutics achieved a valuation of $1.6 billion with less than $4 million in revenue).

 Many commercially successful technologies have major consumer demand, but are not yet integrated into clinical workflows. There is also a common disconnect between commercially successful apps vs those that are validated and more likely to be accepted in clinical practice guidelines. Some have deemed the digital mental health technology field the “lawless wild west,” citing concerns around false claims and poor data privacy management practices.

 Digital phenotyping has failed to make it into clinical workflows.

Further, there are significant safety concerns from post-marketing safety data of a popular new antidepressant, esketamine.

 Such post-marketing data is often not taken into account in the initial go-to-market excitement. Of course, this data is in and of itself a cautionary tale for the psychedelics field, which has received huge investor interest and public interest.

 Psychedelics in psychiatry to date have no post-marketing data, and no study to date is powered to detect conversion to psychosis. Nonhallucinogenic forms of these molecules may be helpful.

 Taken together, these issues create significant concern for this field’s sustainability.

There is thus a risk that the field will slip into the “Trough of Disillusionment.” This will be disappointing, given that every company failure may represent potentially valuable products and services that will not help patients. Moreover, novel intellectual property will be lost. Much of this downward slide will be driven by conventional VC models that are suboptimal for the brain health technology field. Conventional or general VC models rely on financial executives with minimal to no domain experience. The 2/20 model values financial returns within a set timeframe and disincentivizes significant operational input from general partners (GPs).

 Additionally, strategies prevalent in technology startups may not always transfer well to health care startups (eg, “fake it ‘til you make it,” “move fast and break things,” and Theranos). Problems we observe with conventional VC models are outlined in 

How Conventional Venture Capital May Risk Sliding the Field Into the “Trough of Disillusionment”

A Brain Health Technology Market Sustainability Grand Strategy

We suggest a grand strategy that could enable the field to bypass the “Trough of Disillusionment” and progress directly to the “Plateau of Productivity.” VC remains a critical component, but we believe it is imperative to consider additional investment, operational, and governance approaches. We outline these approaches to optimize the field’s sustainability in 

Elements of a Brain Health Technology Market Sustainability Grand Strategy

To optimize the integrity and legitimacy of brain health technology investing, it is key to develop standards and best practices with major international stakeholders. Examples may include the World Health Organization, the United Nations, and the Organisation for Economic Co-Operation and Development (OECD). Engagement with these groups will support sustained engagement with sovereign wealth funds, pension funds, mutual funds, and other large multinational corporations. Moreover, to ensure a global impact, global stakeholders must face the challenges to assure brain health development in low- and middle-income countries (LMICs), where multiple structural conditions may block progress and sustainability. For example, the October 2021 WHO Mental Health Atlas outlined a global lack of progress in leadership, governance, and financing.

“None of the targets for effective leadership and governance for mental health, provision of mental health services in community-based settings, mental health promotion and prevention, and strengthening of information systems were close to being achieved.

The new UN Health Innovation Exchange is a step in the right direction aiming to connect funders, investors, and innovations. Other progress has recently been made. We 

 that the Sustainability Accounting Standards board included mental health and wellbeing in its proposed updated human capital standards.

 Also, a new ISO standard 45003 gives guidance on managing psychological health and safety risks within an occupational health and safety management system

; the Business Roundtable noted that the generation of a healthy environment is a key purpose of a corporation

; and the signatories of the Principles of Responsible Investing listed mental health as one of the top 4 social issue priorities in the future.

Further, the OECD’s New Approaches to Economic Challenges unit has established a Neuroscience-inspired Policy Initiative that seeks to reconceptualize and revitalize the economy and how it works in new ways, laying the groundwork to identify relevant metrics while building a transdisciplinary network of stakeholders. The initiative will rapidly refine and advance the concept of Brain Capital (a novel asset class grossing up brain health and brain skills) via a series of research projects, surveys, data collection, economic modeling, seminars, and clear policy analyses and recommendations.

Tracking Brain Health Technology Market Sustainability

Tracking metrics on this topic would be useful, given the risks outlined in this article. Metrics of company and market sustainability could offer investors greater ability to make scientifically and data-grounded investments and to ensure the field develops sustainably. However, developing representative metrics of company and market sustainability is challenging in a market where most investments flow into private companies. This precludes the use of typical financial metrics such as free cash flow and yearly revenue. While private companies will disclose data, it is likely that they will only release information that is self-serving and can generate interest from investors and the general public. Further, given the strength of the financial incentives of both limited partners and fund managers, it will be challenging to achieve a more sustainable approach. Financial incentives prioritize force feeding unicorns to maximize exit price and maximizing the share price of public companies. Most likely, metrics will need to be carefully developed by integrating data and judgment in a transparent way, possibly through the tools of multi-criteria decision analysis.

Tracking market sustainability is further challenged by the 

 inherent in a field largely reliant on highly technical advances.

 This enables companies to craft a reductionist and self-serving story of how their products function, a phenomenon exemplified by Theranos. Moreover, many life science companies themselves do not fully understand how their products work, which complicates efforts to overcome the information asymmetry rife in the brain health technology field.

Nonetheless, we believe there are available metrics that could help form an index of company and broader brain health market sustainability. These measures represent outputs that can help investors mitigate the risk of company and broader market failures. 

 outlines such elements that may be included in a proposed brain health market sustainability index.

Potential Components of a Brain Health Market Sustainability Index

 recently published a project mapping 50 emerging digital health technologies onto the Hype Cycle.

 We suggest that this type of project should be completed specifically in the brain health technology field, and it should involve surveys of diverse stakeholders from many countries. Then tracking where individuals believe brain health technology map onto the Hype Cycle in a yearly manner would be prudent to guide the field.

In the brain health technology field, there is considerable variability concerning where particular technologies and technology classes sit in the Hype Cycle. Therefore, further work is required to map specific examples onto the cycle. However, irrespective of where these examples stand, formalizing and employing the abovementioned sustainability strategy in the United States, where most investment is currently directed, could mitigate the risk of a broader brain health market failure.

 Of course, we believe our approach should also be deployed proactively outside the United States, especially as global investment begins to increase. We hope that it may even be possible to largely avoid the “Trough of Disillusionment” and reach the “Plateau of Productivity.” We believe our approach could sustain the brain health technology market for decades. Humanity deserves and needs it!

 is an undergraduate studying neuroscience at Dartmouth College. 

 is a director at the PRODEO Institute, an Atlantic Fellow in Brain Health Equity at the Global Brain Health Institute at the University of California, San Francisco, and a Thiel Fellow at Stanford University. 

 is cofounder of the PRODEO Institute and CEO of PRODEO. 

 is Alfred Deakin Professor of Psychiatry at Deakin University and director of IMPACT at Deakin University (Institute for Mental and Physical Health and Clinical Translation). 

 is the director of the Latin American Brain Health Institute, a senior researcher at the Universidad de San Andrés, and a Senior Atlantic Fellow at the GBHI at the UCSF and Trinity College Dublin. 

 is a venture capitalist and an adjunct faculty member at UC Berkeley and Singularity University. 

is a venture capitalist and an adjunct professor in engineering at Stanford University. 

 is a senior clinical advisor for Cohen Veterans Bioscience’s Trauma Research Programs who also serves as strategic advisor co-leading CVB’s Suicide Strategy Initiative. 

 is a corporate attorney, a professor of law at University of Surrey, and an adjunct professor with the UCLA David Geffen School of Medicine. 

 is venture capitalist, founder and managing partner at Newfund Capital. 

 is an undergraduate studying computer science at Stanford University. 

 is the CEO of Fondation FondaMental and professor of psychiatry at University Paris Est Créteil. 

 is a neurologist, neuroscientist, and technologist. He is an adjunct professor with the Department of Neurology at Johns Hopkins School of Medicine and co-lead of The BrainHealth Project at the Center for BrainHealth at The University of Texas at Dallas. 

 is senior scientific and technical manager at the US Army Engineer Research and Development Center, where he manages crisis response and resilience project portfolio. 

 is the CEO and president of Cohen Veterans Bioscience. 

 is cofounder of the PRODEO Institute and co-lead of the OECD NIPI, and he holds adjunct roles with IMPACT at Deakin University, GBHI at UCSF, Brain Health Nexus at Cohen Veterans Bioscience, and Baylor College of Medicine. He is a probono strategic advisor to the HEKA Fund (a collaboration of Newfund Capital and FondaMental Fondation).

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Could COVID-19 finally destigmatize mental illness?

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Responsible innovation in technology for mental health care

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The growing field of digital psychiatry: current evidence and the future of apps, social media, chatbots, and virtual reality

Smartphones could be used to detect depression, Verily finds

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Post-marketing safety concerns with esketamine: a disproportionality analysis of spontaneous reports submitted to the FDA Adverse Event Reporting System

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New approaches to ensure that the brain health technology sector continues to flourish for decades.

Avoiding a Brain Health Innovation Market Failure: Lessons from the Hype Cycle

Elizabeth Holmes of the blood testing company Theranos, who is being tried for 12 charges of wire fraud and conspiracy to commit wire fraud, serves as a sobering reminder of the importance of due diligence.

 Theranos’s many esteemed investors were not unscrupulous, just unaware. Holmes’s case is one of information asymmetry, in which 1 party has information that the other does not. Holmes knew she was selling snake oil; her investors did not.

 is considered by economists as a major source of market failure.

 in the past years, this field needs sustained investment increases over the coming decades to seriously tackle 

multi-trillion dollar global brain health challenges

 Approaches to understand and then minimize information asymmetry between technical entrepreneurs and investors are key.

This asymmetry creates an imbalance of power and can lead to negative results, spanning from poor decision making on the part of the less informed party, all the way to providing an opportunity for exploitation and unethical behavior (

Table 1: Common Types of Information Asymmetry

The opportunity for information asymmetry to lead to fraud is particularly alarming. According to 

, 47% of companies experienced fraud in the past 24 months, and more than $4.5 trillion are lost to fraud each year globally.

Information asymmetry occurs when one party has more or better information than the other party. Asymmetry and fraud will sour investor interest in the field.  

Michael Berk, MD, PhD

Articles

Brain Capital Foundry: Accelerating Responsible Innovation

Avoiding a Brain Health Innovation Market Failure: Lessons from the Hype Cycle

Sustaining Investment in Brain Health: The Dangers of Information Asymmetry

Let’s Build Brains Better! Brain Science-Inspired Policies for the Future

Anthropology-Informed Business Principles for Brain Health

Boosting Brain Health After COVID-19: A Convergence Solution