Evergreen Fund
A fund structure with no fixed end date, continuously reinvesting proceeds rather than winding down on a schedule.
An evergreen fund doesn't follow the traditional 10-year, fixed-life closed-end structure most venture funds use. Instead, it operates indefinitely, reinvesting distributions and periodically raising new capital, similar to a permanent capital vehicle, rather than returning all proceeds to LPs and dissolving by a set date.
Evergreen structures let a GP hold winning positions longer without being forced to sell by an approaching fund-life deadline, and they can simplify LP experience by removing the need to reinvest in a brand-new fund every few years. The tradeoff is less liquidity pressure and discipline, and typically more complex LP entry/exit mechanics (subscriptions and redemptions) than a traditional closed-end fund.
LPs considering an evergreen vehicle should scrutinize redemption terms closely — venture assets are illiquid, so an evergreen fund's promise of periodic liquidity to LPs depends entirely on how well-matched its redemption terms are to its actual underlying portfolio liquidity.
How is an evergreen fund different from a traditional venture fund?
A traditional fund has a fixed roughly 10-year life and returns all capital by the end; an evergreen fund has no set end date and continuously reinvests and raises capital instead of winding down.
Related terms
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