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Partner at Al Gore's climate investment firm sees 2026 IPO window

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Illustration: Tiffany Herring/Axios

Startups and investors will likely have to wait another two years for the window to open for the most promising hardtech climate IPOs, says Generation Investment Management Partner Lila Preston.

Why it matters: Preston's view would be disappointing to those eyeing more exit opportunities this year or next.

Zoom in: The wait could be longer, says Preston, who joined Generation, co-founded by Al Gore, close to 20 years ago and heads up the firm's growth equity strategy. Generation has $50 billion under management, and Preston is currently focused on investing the firm's fourth growth fund, which raised
$1.7 billion in 2022.

  • Preston offered her take while speaking on a panel at SF Climate Week. She later clarified to Axios that the IPO window could open sooner for software-based climate businesses that have predictable revenue and a year of profitability under their belts.
  • Potential IPO candidates include Swedish battery maker Northvolt and energy data company Arcadia.

Catch up quick: The IPO window slammed shut about two years ago when interest rates spiked, financing dried up, and investors retreated.

  • Some climate tech industries were particularly hard hit, such as electric vehicle startups that saw their values plummet.

Threat level: Investors and executives across the sector are worried that climate tech has an IPO problem and the lack of big returns could put a damper on VC firms' future fundraising.

The big picture: For investors like Preston who have been around awhile, public market volatility is part of the game, and investors try to focus on businesses that have a near-term path to growth and potential profits.

💭 Katie's thought bubble: The bulk of the concern is around hard tech climate companies because they tend to take longer to grow into profitable businesses.

  • The broader tech sector is hoping for more IPOs this year and a more solid year in 2025.

Editor's note: This story was updated to clarify details around Generation's fourth growth fund.

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