Rob Day 07 22 09, 10:21 PM

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That big sucking sound you hear…

... is the sound of China deciding to become a big player in solar project installations, overnight.

It's clear that China is going to be a dominant force in cleantech in the coming decades, starting immediately.  But what that will mean for cleantech VCs remains very much unclear.  What is clear is that cleantech VCs need to start getting smart about that factor, asap.  And thus, so should their LPs.

But should cleantech VCs start investing in China?  It's not apparent that US-based investors do very well investing in China, at least without having a local presence on the ground.  Since most cleantech-specialist VCs don't have that, are they vulnerable to being left out?  There are specialist funds (albeit very few) focused on cleantech in China, are they better-positioned?  Or are the markets themselves so specialized (US firms having trouble selling into China, Chinese firms having trouble selling into the US) that they really are totally separate questions?

It will be fascinating to watch how this dynamic continues to develop.  Solar and coal-related techs will be where it gets felt first.  Every coal-related startup CEO I know is paying a huge amount of attention to China.  Many solar CEOs already are, too.  Wind and LEDs and industrial efficiency techs will also need to pay close attention.

China has the potential to radically change the way we think about cleantech venture capital and private equity.  But I'm not yet smart enough to figure out exactly how...