Will soot improve the prospects of cleantech efforts in the developing world?

It was fascinating to see this new study come out, suggesting that soot from deforestation, home cooking fires, coal-fired power, etc., has a significant role to play in climate change.  What was particularly important as a takeaway was that soot is more readily addressable as a near-term climate change driver.

We all see entrepreneurial efforts to get cleaner-burning fuels and equipment implemented across developing economies—in the last few months I’ve seen plans for solar cooking stoves, rice husk-fired generators, and microbial fuel cells, all with the idea of bringing electricity and heat to various developing regions, while minimizing the use of “dirty” biomass fuels more commonly used today.  For many investors with a North American focus (such as myself), these and other regions are simply not part of our funds’ investment mandates, but even for investors with a global mandate these investment opportunities can be difficult to get behind.  Lack of proprietary technology (a solar cooking stove, for example, is essentially just a polished metal reflector), highly scattered target customer base, and low purchasing power leading necessarily to low prices—all of these and other reasons are why institutional venture capitalists haven’t traditionally targeted these “bottom of the pyramid” investments.  It’s a capital gap—and an important one, because there are some significant needs out there in terms of sustainable development and the role that technology (even “low-tech”) can play.

If (a big “if” at this point) efforts to replace high-soot activities with low-soot activities can gain momentum because of its potential for immediate impact on climate change, perhaps this could help bridge that gap.  Large organized efforts to bring about such shifts could mean—from the entrepreneur’s perspective—a few large buyers instead of a billion scattered customers.  The efforts around the $100 laptop are an example of this.  That would potentially help VCs get comfortable with the scalability of some of these opportunities.  In terms of most of the better solutions to soot being relatively low-tech, VCs investing in developing regions are already learning that winning investments there are often those with better execution instead of cutting-edge technology.  And finally, if the benefits of lower soot levels are felt equally by those in developed AND developing economies, this could also help create additional value creation opportunities beyond just selling the equipment itself at affordable prices—something akin to carbon credits, perhaps.

None of this is to minimize the impacts of atmospheric carbon emissions, it would seem.  But if soot can become a focus of those worried about near-term climate change, perhaps it could end up having some beneficial impacts on developing economies and the VCs who are investing in them.

Deals and news from the past week:

• Very late to mention GMZ Energy, the thermoelectric material startup that emerged from stealth mode last week.  As part of that PR effort, the company revealed an undisclosed amount of seed financing from Kleiner Perkins.

• Jonathan Shieber at VentureWire mentioned this week, in an article that covered all of the recent activity in energy storage, that stealth battery storage company Seeo has taken in “nearly $1mm” in financing from Khosla Ventures, following on another $1mm financing back in April 2007.

• Arxx Building Products, a green building materials company that recently merged with venture-backed Apex Construction, has taken in $5mm from MMV Financial, according to VWire.  Via the Apex connection, the company’s existing venture investors include Element, Nth Power, and Emerald Technology Ventures.

• MIT solar spin-out 1366 Technologies—which I’m assuming is named after the year that the Stella Artois brewery was launched (just kidding, it’s probably named after the solar constant)—has raised a $12.4mm Series A.  North Bridge Venture Partners and Polaris Ventures co-led the round.

• Elevance Renewable Sciences, a specialty chemicals developer, has raised a $40mm round of financing led by TPG Growth and TPG Biotechnology Partners.

• Cleantech investors in the news:  Jonathan Shieber at VWire also reported yesterday that Generation Investment Management is entering the cleantech venture space, raising a targeted $400-600mm fund.  Generation IM is already connected with a few high-profile investors you may have heard of before…  and also boasts one of the smartest investors you probably haven’t heard of, Duncan Austin.

Other news and notes:  Lux Research brings another gloomy perspective to forecasts about the solar market over the next couple of years…  Another cleantech cluster in the making?  Colorado State kicks it in gear...  And finally, on that same story, what kind of “tricycle” doesn’t have three wheels, anyway?