From Old To New Again: How Past Tech Trends Have Become Today’s Hottest And Biggest Investment Categories

Mark Twain famously said “History doesn’t repeat itself but it often rhymes.”

We see this to be true across fashion, social issues, and even in politics. What may be surprising is the extent to which we see it in the technology industry. 

Patterns and themes that were once in vogue in tech go from being front and center, to fading in relevance, only to return as the next cool trend.

High-growth companies and startups in the cleantech, climate tech, social media, and fintech categories have transitioned from being considered unpopular and radioactive to becoming some of the most sought-after areas of technology investments.

What’s changed? Let’s start with clean energy and climate technology. 

A growing collective awareness about the impact and importance of attacking problems related to energy consumption, climate change, and sustainability have graduated from a niche issue to the forefront of founders’ and investors’ minds alike.

According to BloombergNEF, a research subsidiary of Bloomberg Finance, a record-setting $17 billion was invested in 2020 in technology companies tackling climate challenges.

This mirrors the data from PwC that cites a strong and growing interest from venture capitalists into climate tech companies, representing an estimated $60 billion in capital between 2013-2019.

The staggering rate of consumer adoption of electric vehicles like Tesla and others over the last many years surely helped in shifting perceptions about whether it’s cost efficient and whether it’s cool to do what’s best for the environment.

Contrast this to the 2000s when notable venture firms were publicly criticized for their large cleantech bets that didn’t ultimately pay off. This pushed a level of fear and skepticism into the sector that undoubtedly resulted in less investment for some time. Now, the tables have turned in favor of more innovation.

In addition to cleantech, social media technology is another category that is also experiencing meaningful  traction.

First TikTok quickly amassed a following that caught the eyes of consumers and media insiders alike. Then Clubhouse carved out a niche in a burgeoning medium of social audio, only to be quickly followed by Twitter’s Spaces and others.

It wasn’t that long ago when Instagram and Snapchat were speculated to be the last of modern social platforms. Feature parity and near-identical design styles made it indistinguishable for users to see any meaningful differences between some products.

In many tech circles, at least in my experience, there was a point many years ago where it felt as if people discounted how much more social networks and platforms could innovate to become something new and exciting.

Late last year, the Silicon Valley venture firm Andreessen Horowitz emerged as a vocal proponent of this theme when it proclaimed that growth in the social tech space returned in roaring fashion.

Since then, we’ve gone on to see hundreds of millions of dollars in capital get deployed to startups that are tackling social in new and creative ways.

Now let’s talk about financial technology, or fintech, companies. 

Engagement from consumers and investors on all things fintech seems to be at recent highs, getting a boost from all corners of the industry from companies like Stripe, Robinhood, Coinbase, SoFi, Plaid, and others.

The mainstream growth of cryptocurrency and potential innovations related to decentralized finance, often called De-Fi, have opened the doors to a wave of new ideas that could lead to significantly more startups in the space, with capital investment likely to follow.

Separately, when you consider how the GameStop and Reddit drama unfolded earlier this year, the world got a chance to see what others already knew was unfolding with financial mobile platforms like Robinhood and others. Consumers want to use simple technology to more actively trade the markets.

It’s clear there is a lot happening in fintech right now and it could be here to stay.

According to a report from the auditing and tax service firm KPMG, global investment in fintech companies reached nearly $105 billion in 2020, in large part from venture capital investments. This is the third-highest annual investment total for the category, ever.  

We are seeing consumers and entrepreneurs return to many of the ideas and behaviors that were once very popular but went in the shadows for a bit, only to leverage new innovations to establish better products.

We should celebrate this.

The success of climate and cleantech companies in this category could benefit the greater society as efficiencies are gained, waste is reduced, and energy is conserved.

The continued growth of social tech investments, alongside fintech investments, will yield new and hopefully better ways for people to engage with each other and the financial markets.

Based on the amount of investment dollars, growing volume of newcomers in the space, and the long time horizon needed for some companies to develop, we could still be in the early days of this revitalized sector boom.