December 21, 2020
< Back to blogs
Technology Trends 2021
What are the important technology trends and investment trends for 2021?
If you are curious about the direction of technology innovation, one place to look for clues is the Propel(x) portfolio.
This is not investment advice.
Propel(x) solves the problem of how to have access to invest in technology startups. Our team meets with entrepreneurs and investors across various technologies and sectors to source investment opportunities in private technology companies for accredited investors. If you are an accredited investor and are interested in broadening your deal-flow, consider opening an account on Propel(x). Joining is free and the registration process takes less than one minute.
We focus on deeptech, companies whose value is foremost characterized by technology risk. Consequently, we often see technology trends before they hit the market.
“The primary risk in a deep tech or hard tech company is technical risk, while market risk is often overlooked due to the potential value of the solution to society. The underlying scientific or engineering problems being solved by deep tech and hard tech companies generate valuable intellectual property and are hard to reproduce.” (Wikipedia)
Some investors refer to deeptech as “tough tech” (MIT Engine) because deeptech companies seek to address tough or “wicked problems” (Stanford Social Innovation Review). Deeptech companies are often preceded by years of academic or government funded research before commercialization and are therefore a good window of the potential future of technology innovation.
Technology Trends for 2021
- Advances in gene delivery, especially for infectious diseases
- Disaster Preparedness
- The Rise of Climate Tech
- Sustainable Materials to Replace Plastic
- The Rise of Private Markets and Remote Investing
1. Advances in gene delivery, especially for infectious diseases
2020 was truly a year like no other. As of this writing, we are still in the throes of the COVID-19 pandemic. Remarkably, thanks to unprecedented investment and tireless scientific advancements, multiple vaccines for the virus are available. Global vaccine distribution is slow and faces unforeseen challenges, but it is happening.
The CDC approved vaccines by Pfizer and Moderna, and shortlisted vaccines in Phase 3 Clinical Trials from AstraZeneca, Janssen, and Novavax (as of January 2021). Interestingly, different vaccines pursue different strategies for developing immunity and may have different levels of efficacy.
Propel(x) hosted a panel discussion on the topic of remaining challenges for the COVID-19 vaccine in December of 2020. Moderated by Hemai Parthasarathy from Breakout Ventures, speakers include Dr. John Lewis from Aegis Life, Una Ryan from the women-focused angel investment group Golden Seeds and Jenny Yip from Adjuvant Capital. If you are interested in learning more about vaccine development and some of the unique dynamics of investing in vaccines, you can watch the full conversation in the YouTube video linked below.
One emerging company with a differentiated approach to vaccine delivery is the startup Aegis Life. Led by Dr. John Lewis, Aegis leverages a novel gene delivery platform technology which was developed by sister company Entos Pharmaceuticals to address the challenge of delivering medicine inside human cells. Aegis uses Fusogenix to quickly prototype nucleic acid-based vaccines and other infectious disease therapies.
COVID-19 forever changed our lives and the way we lived and will no doubt continue to influence the pace of infectious disease investment and innovation. As evidenced by the Moderna vaccine, new technologies and medicine based on genetic payloads represents the dawning of a new frontier.
2. Disaster Preparedness
Unfortunately, COVID-19 was not the only public health emergency. For weeks much of the Western U.S. burned. According to the New York Times, more than two million acres burned across the state of California alone. Experts cite a mix of factors including climate change, zoning policy, and human action or error.
Wildfires and natural disasters destroy natural resources, displace people from their home, and result in catastrophic economic loss, both directly and indirectly. An article in Nature estimated the economic impact from the 2018 California wildfires at $148.5 billion, or roughly 1.5% of the state’s GDP. Estimates from the 2020 fires are still pending. California power regulators fined the energy utility Pacific Gas & Electric with a $2.1 billion fine for igniting a series of deadly wildfires, including the 2017 Tubbs Fire in Santa Rosa.
A broader review of the rise of natural disasters potentially due to climate change and the economic and social impact of such disasters paints a frightening picture. If there are any lessons from 2020, one clear one is that communication and delivery of emergency disaster services will be crucial to reducing human casualties and putting out fires.
Work Resource Management (WRM Software) is a Connecticut based disaster management software tool. Their platform, Storm Manager, helps state agencies and utilities track and manage crews deployed in the field. Simple tasks like knowing which team has what equipment prove to be mission critical in emergency situations like winter storms or wildfires. WRM Software is led by CEO Richard Addotta, who developed his expertise in contract strategy and management at National Grid.
Disclosure: I invested in WRM Software via a Propel(x) syndicate in 2020. The Newton Fund, an affiliate of Propel(x) has also invested.
Resource management software is one of the many important tools that will be required to deal with the consequences of climate change.
3. The Rise of Climate Tech
PwC recently wrote a report, “The State of Climate Tech 2020: The next frontier for venture capital.” The report reads,
“As the COVID-19 pandemic has taken hold of the world, the question of whether venture capital, and early stage investing more broadly, is backing and scaling the innovations our world really needs has never been more pertinent. Life science and biotech investing is an asset class perhaps most resilient and relevant to the short-term impact of COVID-19, but there is another impact-critical investment area that is emerging as an increasingly important investment frontier: climate tech.”
Climate tech is the name for technology companies that are focused on decarbonizing the global economy and potentially reaching net-zero emissions. The unicorn payments processor Stripe announced a commitment to generating negative emissions last year. Ryan Orbuch, who works for Stripe on Climate, produced a Negative Emissions reading list if you are interested in learning more about the subject.
Climate tech includes both larger tech companies as well as startups. SkyCool is a Berkeley based materials company that launched a solution that potentially provides 24-7 electricity free cooling. According to the company, air conditioning and refrigeration systems consume close to 25% of electricity generated worldwide and are responsible for 7% of global greenhouse gas emissions. Skycool’s primary value proposition is to try to reduce the energy load for cooling via radiative cooling materials with a panel system to improve the efficiency of vapor-compression based cooling (air conditioning and refrigeration). Any reduction in the amount of energy used for cooling would translate to reduced emissions of CO2 and other harmful greenhouse gasses assuming lower energy consumption would reduce the amount of energy production.
Climate tech represents the intersection of deeptech and Environmental-Social-Governance (ESG) / Impact Investing as many of the new startups are based on fundamental research and breakthrough technology innovations. Jason Holt, a seasoned deeptech and climate tech investor is bullish on the rise of Climate Tech. Following a recent interview with Jason for the Propel(x) podcast, I asked him what are the key technology areas that are needed to address climate change. According to Jason, the two major areas of focus for new technology innovation are 1) technology to get to net zero emissions, and 2) technology to draw down existing CO2 from the atmosphere. Read his full response here.
4. Sustainable Materials to Replace Plastic
“The pandemic is reshaping their views about sustainable packaging materials in ways that will force the whole value chain to act quickly.”
Ecommerce and home delivery services were two sectors that grew substantially in 2020. The combined changes of work-from-home and shelter-in-place shifted consumption habits away from local retail to online transactions. According to McKinsey, consumer concerns about safe packaging includes issues related to environmental impact, hygiene and food safety, and functional issues such as shelf-life. Moreover, environmental concerns were spread across different impact areas.
Innovations in the stability and durability of plastic substitutes over the last few years has made it possible for companies to gain traction in the packaging and consumables market. Repurpose, a women-led cleantech company based out of Los Angeles, manufactures and sells plant-based tableware and home supplies. The company sells bowls, plates, cups, straws, cutlery, and “trash” bags made from a variety of plant fibers including corn, beets, wood pulp, cassava, or bamboo. Their Plastic-Free Dinner Set is aimed at replacing children’s plastic dinner sets, and is microwave and dishwasher safe.
Companies like Repurpose would not be here today if it were not for funds like Safer Made, a venture fund focused specifically on investing in companies that have technologies to reduce harmful chemicals. Safer Made publishes reports on chemicals in various industries. In their most recent report on packaging, they list developing more high-functioning, fully compostable, packaging materials as a key step in bringing about safer food packaging.
5. The Rise of Private Markets and Remote Investing
Propel(x) provides individual accredited investors the opportunity to invest in new technology companies via an easy to use online platform. Aegis, WRM Software, SkyCool, and Repurpose all previously raised money via Propel(x). Put differently, accredited investors were able to source these opportunities via Propel(x), opportunities they may not otherwise had access to due to geographic, social-network, or domain expertise-based limitations.
2020 marked an important year for private market investing because the Securities and Exchange Commission (SEC), the governing body for financial services, broadened the definition of who qualifies as an accredited investor and therefore who is allowed to invest in startups. New person types in the updated definition include:
- Financial services and investment professionals with Series 7, 65, or 82 licenses
- “Knowledgeable employees” of private funds
- Certain companies and organizations with $5 million or more in assets, including LLCs, Family Offices, “Indian tribes,” and foreign entities
Propel(x) hosted a panel discussion with two leading venture investors on what changed in their investment practice since remote work due to COVID became common. Ben Yu from Sierra Ventures joined Rajesh Swaminathan of Khosla Ventures. The full video is hosted on YouTube and linked below.
2020 was a year marked with tragedy, but also with resilience and innovation. The beginning of the new year is traditionally a moment for reflection, planning, and the projection of hope and aspirations on the days ahead.
The rate of innovation today is astounding. Deeptech companies are building potential solutions to some of the most “tough” and “wicked” problems, but they cannot do it alone. They will require financing and leadership from angel and seed investors.
Investment platforms like Propel(x) provide an entry point which allows investors and deeptech startups with a place to meet, which they may not otherwise be afforded. Pitchbook’s Q3 Analyst Report on Angel Investing summed up the current challenge for angel investing succinctly.
“While our data shows angel investment has so far been relatively stable, the COVID-19 pandemic raises more difficulties for angel investors than it does for late-stage firms. The lack of in-person events can stem the growth and development of personal networks, and the inability to conduct face-to face due diligence can cause deals to be put on hold.”
If we learned anything from 2020 it is that instead of pulling back on funding innovation, now is the time to lean-in.
The five major trends identified represent technology areas that were transformed by the global pandemic. Join Propel(x) to learn more about emerging technology startups. Recent investments include technologies related to computer perception and human machine interface, vehicle light weighting, personalized medicine from genome sequencing, applied artificial intelligence in synthetic biology, and advanced medical devices to replace surgery to name a few.