Europe's neurotech grey zone is failing companies too

BRUSSELS – Europe’s neurotechnology companies are caught between two regulatory worlds. Companies developing consumer neurotechnology devices say that the medical pathway demands too much time and capital while the consumer pathway offers too little structure, challenging the ability of founders to build sustainable businesses in either, according to new research published today by Centre for Future Generations (CFG). 

The finding challenges the assumption that regulatory ambiguity mainly benefits industry at the expense of consumers — in practice, it appears to be failing both.

The brief, the third in CFG’s Neurotech between wellness and medicine series, draws on interviews with neurotechnology founders and industry executives in Europe and the United States. It finds that many companies developing low-risk devices are not choosing the consumer route to avoid medical regulation, but rather weak reimbursement incentives, and a lack of dialogue and  practical guidance from regulators make it the most commercially rational path — even when their technology could serve medical purposes.

“Companies aren’t choosing the consumer route to dodge medical regulation, they’re following market incentives shaped by a binary framework that was designed when products were more clearly either medical or consumer,” said Virginia Mahieu, Neurotech Director at Centre for Future Generations. “That framework pushes start-ups to commit early to whichever pathway offers the greatest commercial advantage, and not necessarily the one that makes most sense for their application.”

The consumer neurotechnology market has grown rapidly, from 41 companies in 2014 to 153 in 2024, with wellness now the largest consumer segment and the most heavily backed by venture capital in Europe and North America. Yet CFG’s research found that the current regulatory framework — designed when products were more clearly either medical or consumer — no longer reflects the technological reality.

Several companies told CFG that the medical pathway, while demanding more time and capital, actually offers a clearer and more structured route than the legally fragmented consumer space, which one executive described as a regulatory “wild west.” Others highlighted that navigating the EU’s Medical Device Regulation is significantly harder and more time-consuming than the equivalent US process, with some European companies seeking FDA approval first before returning to Europe.

Companies also called for closer dialogue with regulators and practical tools — from consent templates to guidance on brain data governance — to help them embed responsible practices from the ground up. Several noted that consumer trust, for which regulatory compliance is essential, is key  to the success of their business. A number of executives noted that upcoming regulatory developments have far-reaching technical implications, from how databases are structured to how opt-out mechanisms are built, and that greater visibility on what is coming from regulators would help them make better decisions now.

“These grey areas aren’t good for consumers, obviously, but it doesn’t get said enough that they’re also terrible for companies,” said Lara Natale, Senior Public Affairs Director at Centre for Future Generations. “Trying to build and scale innovative companies on murky regulatory sands is a nightmare, and it’s one of the things holding back European neurotech companies.”

The series’ final instalment, to be published soon, will propose a governance framework designed to close the gap between wellness and medical regulation for health-adjacent technologies.

Read the full brief. Explore the full Neurotech between wellness and medicine series.