The new company is targeting a valuation of about $850 million and is in early talks to raise as much as $250 million, according to people familiar with the matter who spoke to Financial Times.

A significant portion of the funding is expected from OpenAI’s ventures arm, though the final investment decision has not been made.

Altman will be joined in the venture by Alex Blania, the head of Tools for Humanity, the firm behind the iris-scanning digital ID project World. Merge Labs’ focus will be the development of high-bandwidth brain-computer interfaces capable of enabling seamless communication between human thought and digital systems.

While Altman will not hold an operational role in the new company, his involvement stresses his long-standing fascination with “the merge”, the idea that humans and technology will eventually integrate to an extent that redefines human capability. 

In 2017, he wrote: “Although the merge has already begun, it’s going to get a lot weirder. We will be the first species ever to design our own descendants.”

The venture comes at a time when Musk’s Neuralink is conducting human trials for patients with severe paralysis. Neuralink’s N1 chip, implanted using robotic surgery, allows users to control external devices purely with thought. 

The company, which Musk founded in 2016, recently raised $650 million in a Series E round at a $9 billion valuation and has expanded its trials to the UK, Canada, and the UAE.

Merge Labs will face a competitive field beyond Neuralink, with firms such as Synchron, Paradromics, and Precision Neuroscience all pursuing commercial brain-computer interface applications. Synchron has already achieved integration with Apple systems, while Paradromics is preparing its first human trials.

The launch is expected to add another chapter to the rivalry between Altman and Musk. The two co-founded OpenAI in 2015 but parted ways in 2018 after disagreements over the organisation’s direction. Their exchanges have since spilled into public view, including recent arguments on X.

For Sam Altman, the Merge Labs is an expansion beyond AI. Alongside his leadership of OpenAI, now valued at about $300 billion, he has backed ventures in nuclear fusion (Helion), nuclear fission (Oklo), and global digital identity projects.

OpenAI has declined to comment on Merge Labs or the potential investment.

The announcement, made Monday, is an aggressive move to scale its operations as trials expand across three countries.

Five people with severe paralysis are already testing the device. They’re using it not just to operate phones or computers, but to interact with the physical world, hands off, purely with thought.

The company, founded by Elon Musk in 2017, says the funding will help it meet demand from patients with unmet medical needs. “This funding helps us bring our technology to more people — restoring independence for those with unmet medical needs and pushing the boundaries of what’s possible with brain interfaces,” Neuralink said.

The implant, a coin-sized chip linked to the brain by 64 ultra-thin threads, reads neural activity and translates it into commands that machines understand. That’s not new in neuroscience circles, but the scale, funding, and public ambition are unique.

So far, Neuralink’s trials are being run in three countries, but the company has not disclosed which. What’s evident is that these are not just lab-bound tests. The patients are engaging with digital and physical systems in ways that were previously unthinkable for people with paralysis.

Just last month, the U.S. Food and Drug Administration gave a “Breakthrough Device” designation to Neuralink’s speech-restoring technology. A similar tag had earlier been awarded to a vision-restoring device also under development. The FDA says this designation helps speed up access to high-impact devices by accelerating their development and review process.

Neuralink’s backers in this round read like a who’s who of venture capital: ARK Invest, DFJ Growth, Founders Fund, G42, Human Capital, Lightspeed, Qatar Investment Authority (QIA), Sequoia Capital, Thrive Capital, Valor Equity Partners, and Vy Capital.

Last month, Semafor reported Neuralink had already pulled in $600 million at a valuation of $9 billion. The latest round will likely push that figure higher.

Meanwhile, Musk is juggling multiple tech bets. He recently announced he was stepping down as a special adviser to Donald Trump, choosing instead to focus on companies like Tesla, SpaceX, xAI, Neuralink, and the social platform X. 

On that note, Morgan Stanley is reportedly arranging a $5 billion debt package for xAI, with plans for a $300 million share sale that could value the AI firm at $113 billion.

Back to Neuralink, this is not science fiction anymore. It’s a race to redefine what the brain can do when paired with machines. Other companies like Paradromics and Synchron are also moving quickly. Paradromics just implanted its own brain-computer interface into a human for the first time.

Musk once said he’d get the Neuralink chip implanted himself. That may have sounded like a wild stunt when he first said it, but with five humans already using it to move and communicate, it’s becoming hard to dismiss the idea outright.

Sources close to the matter say the brain-implant startup, founded by Elon Musk, is aiming for a pre-money valuation of $8.5 billion. If successful, the round would push the company’s worth to roughly $9 billion.

This is a massive leap from last year’s $5 billion valuation and a far cry from the $280 million it had raised previously under the watch of Peter Thiel’s Founders Fund. Although, an insider revealed that the deal could still change.

We’ve seen this pattern before—Musk’s ventures grow fast, burn cash faster, and rely on great visions to stay ahead. But Neuralink isn’t building electric cars or rockets. It’s building brain chips.

The company’s first human trial, conducted earlier this year, enabled a paralyzed man to move a cursor, play games, and browse the web using only his thoughts. 

It’s a breakthrough—but not without cracks. Reports emerged that some electrode threads in the implant had started retracting, a glitch that could reduce performance.

This isn’t Neuralink’s first clash with reality. In 2023, the U.S. Food and Drug Administration rejected its application to begin human testing, citing safety concerns. 

The agency has since given the green light, but those early doubts haven’t disappeared. Meanwhile, the SEC reopened an investigation late last year into Neuralink’s safety claims, probing whether the company may have misrepresented what its brain chip could actually do.

And then there’s the competition. Neuralink isn’t alone in this race. Synchron Inc., a rival neurotech firm, is also testing implants that let users type with their thoughts. 

Precision Neuroscience recently earned a “Breakthrough Device” designation from the FDA—an edge in a sector where time, approvals, and credibility matter as much as innovation.

Yet Neuralink remains the flashiest name in the room, in no small part because Musk won’t stop talking. His goals go far beyond helping people with spinal injuries. He’s said, quite literally, that his chip could eventually be used “to treat obesity, autism, depression and schizophrenia.” That’s on top of letting people “surf the web and communicate telepathically.”

Meanwhile, the company continues to look for human volunteers. Neuralink’s current clinical trial—the PRIME Study—is recruiting patients with severe spinal injuries or ALS. The goal? Test if brain signals can reliably control external devices.

All of this is happening while Musk’s empire balloons. SpaceX recently hit a $350 billion valuation. xAI, his AI startup, was valued at $80 billion after a merger with X, formerly known as Twitter. Musk himself remains the world’s richest man, with Bloomberg pegging his net worth at $301 billion.

But Neuralink, unlike Tesla or SpaceX, looks beyond performance or profits. It’s about the brain. About trust. And that makes everything more complicated. Raising $500 million might be easy if investors are dazzled by dreams. Delivering on those dreams? That’s a much harder implant.