In a revelation that has raised eyebrows across both the tech and financial sectors, Elon Musk’s brain-computer interface company Neuralink was classified as a “disadvantaged business” in government filings before reaching its current $9 billion valuation.
The designation, typically reserved for businesses owned by socially and economically disadvantaged individuals, appears in federal procurement documents from 2023, according to records reviewed by Epochedge. This classification came shortly before the company’s valuation skyrocketed following successful human implantation of its brain chip technology.
“The timing creates an unusual juxtaposition,” says Martha Reinhart, corporate governance specialist at Columbia Business School. “A company led by one of the world’s wealthiest individuals benefited from a designation meant to level the playing field for truly disadvantaged entrepreneurs.”
The Small Business Administration defines disadvantaged businesses as those primarily owned by individuals who have been “subjected to racial or ethnic prejudice or cultural bias within American society.” These businesses typically receive preferential treatment in government contracting.
When reached for comment, Neuralink representatives stated the classification stemmed from minority ownership percentages at the time of filing, though they declined to specify which owners qualified under disadvantaged status criteria. SEC filings show Musk owned approximately 67% of Neuralink at that time.
Federal procurement records show Neuralink received three government contracts totaling $12.7 million during the period it maintained disadvantaged business status. These contracts primarily involved research partnerships with the National Institutes of Health and Defense Advanced Research Projects Agency.
“This case highlights the need for greater transparency in disadvantaged business certification,” says Richard Donovan, senior policy analyst at the Economic Policy Institute. “The program was designed to create opportunities for entrepreneurs facing systemic barriers, not to provide additional advantages to well-capitalized ventures with billionaire backers.”
The classification coincided with Neuralink’s critical development phase before achieving its first successful human brain implant in January 2024. That milestone triggered a funding round that established the company’s $9 billion valuation in March.
Industry observers note the timing raises questions about resource allocation in federal contracting. “Every dollar directed toward a Musk-controlled enterprise under disadvantaged business provisions potentially displaces genuinely disadvantaged entrepreneurs,” explains Terrence Walker, director of the Center for Responsible Enterprise.
The Federal Acquisition Regulation mandates that disadvantaged business status requires both social and economic disadvantage. Economic disadvantage is typically defined as having a net worth below $750,000, excluding primary residence and business equity—a threshold Musk exceeded by billions.
Neuralink’s regulatory filings changed in April 2024, removing the disadvantaged business classification. This modification occurred after the company secured $300 million in venture funding from Founders Fund, Sequoia Capital, and other major investors.
Market analysts suggest the classification may have provided strategic advantages during the company’s developmental phase. “Government contracts often confer legitimacy beyond their dollar value,” notes Sheila Bains, technology sector analyst at Morgan Stanley. “For emerging biotech companies, these relationships can significantly reduce perceived regulatory risk.”
The revelation comes as Neuralink prepares for expanded human trials of its brain-computer interface technology, having received conditional FDA approval to increase participant numbers. The company aims to help patients with severe neurological conditions regain communication abilities and motor control.
Congressional oversight committees have shown increased interest in disadvantaged business certification practices, with Representative Katie Porter requesting documentation from federal agencies regarding verification procedures. “We need to ensure these programs serve their intended purpose of addressing historical inequities,” Porter stated in a recent hearing.
For Neuralink, the classification represented a small but notable chapter in its journey toward commercialization. Today, with multiple successful implants and significant private investment, the company’s trajectory appears increasingly independent of government assistance programs.
As regulators consider reforms to disadvantaged business certification, the Neuralink case offers a compelling example of how well-resourced companies can navigate designation systems originally designed with different beneficiaries in mind.
Sources at the SBA indicate the agency is reviewing certification processes to prevent similar situations, though they declined to comment specifically on Neuralink’s prior status. Meanwhile, the company continues its ambitious push to revolutionize treatment for neurological conditions—now with the substantial backing its $9 billion valuation commands.
