Mentorship and funding from Ontario gave firm an early boost

There are probably four or five centres in the world that do neuroscience very well, and Ontario is one of them. The quality of neuroscience from McMaster to U of T to start-ups like ours is up there with the best in the world.

Toronto-based InteraXon is best known today for its signature retail product, Muse—a brain-sensing headband that helps users get more out of meditation. But behind Muse is a "deep, broad, rich platform" capable of much more, says CEO Derek Luke.

Muse operates like an electroencephalogram (EEG), measuring brain activity and sending the data to an app so users can get feedback and improve their practice. The product has its roots in its founders' interest in brain-computer interaction. Ariel Garten, the original CEO, had a background in neuroscience and design, and was working in computer scientist Steve Mann's University of Toronto lab in 2003 when she met a student of Mann's, Chris Aimone. Mann had developed a basic brain-computer interface that fascinated Garten and Aimone. Together with a third friend, Trevor Coleman, they formed a start-up to explore ways to apply the technology.

Derek Luke, CEO, InteraXon

Ontario sponsorship opens doors

Woman meditating with Muse at office

The trio's big break came in 2010 when they were sponsored by the Ontario government to showcase their emerging technology at the Vancouver Olympics. Attendees could strap on the headband and use their minds to control lights at the CN Tower, Parliament Hill and Niagara Falls. Nearly 5,000 people passed through the installation, says Luke.

That was when the founders started asking themselves: rather than doing events, could we actually bring a product to market?

The result was Muse, which the company demonstrated at the January 2014 Consumer Electronics Show (CES), generating considerable media attention and numerous pre-orders. The next steps were a whirlwind of activity as the team quickly assessed the product market and figured out how to set up manufacturing, hire staff, and develop and distribute the corresponding app.

Top-shelf advice and funding from Ontario programs

Help from two Ontario programs was pivotal in those early days, says Luke. The Ontario Centres of Excellence (OCE) and MaRS offered not only funding, but mentorship in these areas and others.

"We were helped by some of the most seasoned pros who worked with OCE and MaRS."

Muse attracted $3.5 million in revenues in its first few months. Revenues doubled going into 2014–15 and again into 2015–16—and are expected to double again this year. To date, more than 100,000 people have used Muse. InteraXon now possesses EEG data from more than two million meditation sessions.

The company has come a long way from the days when it worked hard to raise $300,000 through crowd-funding: since then, it has attracted $19.5 million from 30 different investment sources. It hasn't hurt that Muse generated early interest among several celebrities, among them figure skater Elvis Stojko, Google engineer Chade-Meng Tan and Indigo CEO Heather Reisman. American actor and investor Ashton Kutcher also invested in the company through his venture capital fund, A-Grade Investments.

Muse logo

Reisman's interest in Muse supported the product's retail expansion, as she agreed to sell it at Chapters and Indigo stores. Muse was soon in Best Buy, Amazon and Target. The growth supported its longer-term goal of becoming a disruptive force in the health and wellness and mental health areas, says Luke.

Soon after, the company started to notice significant interest from mental health professionals. Clinicians were using Muse to help treat addictions, eating disorders, anxiety and stress—and quickly this became a lucrative new market. The next logical step was to launch a related software product. The firm came up with a dashboard clinicians could use to see the results of clients' Muse sessions. Today, InteraXon counts 2,000 clinicians among its clients.

A game-changing innovation

But the start-up's immense potential is perhaps most easily grasped in the context of its newest product. The company recently signed a licensing deal with Safilo, an Italian eyewear company that owns brands like Polaroid, Carrera and Smith Optics, and has licensing deals with some 25 designer labels, including Dior, Fendi, Gucci and Fossil. InteraXon announced its newest product in December: glasses embedded with Muse's brain-sensing technology.

This innovation makes InteraXon a major contender in the emerging smart-glass market, says Luke. While the glasses look like high-end fashion glasses, they contain an impressive quantity of technology, including electromyography (EMG), electrooculography (EOG) and a range of sensors. The glasses will launch later this year.

Muse, the brain sensing headband

Another important source of revenue will be additional apps for Muse, says Luke—from entertainment to ADHD treatments. Developers can build on both the headband and the glasses. InteraXon is also in talks with virtual reality companies about licensing its technology.

Capitalizing on Ontario's innovation infrastructure

All this rapid growth is translating into a need for more employees. The firm expects to hire another 50 this year, doubling its size. Key challenges will include managing the growth, attracting more investors, and making it clear that Muse is far more than a quirky meditation tool—that it's actually the world's largest database of brain activity, with a range of fascinating potential applications.

Intellectual property issues and access to ever more capital may pose challenges, says Luke, but he remains encouraged by the Ontario government's engagement, lauding the province's "very proactive view" on helping start-ups access top talent. He's also pleased with the foresight Ontario has shown in helping to fund scale-ups in addition to start-ups.

"The Ontario government really gets it and is engaging in positive ways."

InteraXon's location in Toronto will be an asset when it comes to finding the necessary talent, adds Luke. Currently, all but one of the firm's employees are local, and—at least for now—he aims to keep it that way. Retaining them is easy, he notes, thanks to Ontario's attractive lifestyle and cultural factors. Overall, says Luke, Ontario has done an impressive job of supporting InteraXon and others like it, and is helping to create a significant neuroscience cluster here.

"There are probably four or five centres in the world that do neuroscience very well, and Ontario is one of them. The quality of neuroscience from McMaster to U of T to start-ups like ours is up there with the best in the world."

Sector/subsector: 

April 20, 2017

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