Deep Dive: A look into Evergreen Funds

Max Fleitmann
Founder of VC Stack
Deep Dive: A look into Evergreen Funds
Uma Patel
VC Content Creator

This deep dive was initially published in our VC Stack newsletter. Make sure to subscribe here to not miss any future episodes.

What is an Evergreen Fund?

An evergreen fund is an open-ended fund in which there is no end date or fixed capital benchmark. The distinguishing feature of this fund type is that once a portfolio company exits the capital is permitted to be reinvested into another investment opportunity as opposed to being distributed out to investors.

Most funds are close-ended and last between 8 to 12 years. Once capital is raised from LPs the VC firm invests the money into helping a company grow, after which they are obligated to return the investment by the end date through an exit (i.e. sale or IPO of the company).

Open-ended funds have no defined start or end date and investors may come and go as they wish. Not all open-ended funds are evergreen funds, however, open-ended funds rely on the NAV (net asset value) and yield to determine by ins and by outs for investors. Additionally, if a portfolio company exits in an open-ended fund capital is distributed out to investors and not recycled as in an evergreen fund.

Pros & Cons of the Evergreen fund model

  • Focus on long-term growth. Opportunity to invest in slower-growth industries such as biotechnology, climate tech, real estate, or software in which testing and research may extend the time it takes to become cash positive. Evergreen funds give the founder and investor power over their timeline and flexibility in developing their vision.
  • Flexible timeline. Investors have no need for an exit strategy so they can hold onto high-performing portfolio companies or avoid the potential of a premature exit. Additionally, the fund manager can wait till valuations are lower in order to make a more financially strategic investment in a potential portfolio company.
  • NAV. Evergreen funds typically allocate units for investors to buy in and out of the fund based on the NAV (net asset value) of the portfolio companies. The NAV provisions may be complicated to determine and require transparency and detail for investors. The benefit of this is that the unit price increases as the assets under management increase.
  • New fund structure. The evergreen model is still relatively new to startups and investors with 200 such funds disclosed in total according to Toptal Talent Network Experts article Exploring Evergreen Funds with a VC Investor Who Raised One. Most of these funds are based in the US and UK.
  • Greater illiquidity. Unlike in a closed-end fund, investors do not have a set date when they will receive a return on their investment. However evergreen funds will provide exit options for investors by either offering redemption periods where they can sell their share back to the fund or new investors can buy out a current investor. If the company goes public then the units are publicly tradable as usual. This money can then be used to invest in other companies or to pay out to the people who have invested in the evergreen fund. The fund still holds a portion of the company's shares after the IPO, and the fund managers will continue to monitor the performance of the company and make decisions about whether to sell more shares or hold on to them for longer.

Evergreen Funds


BioAdvance works closely with entrepreneurs to build strong companies in the mid-Atlantic region that are focused on improving human health.

JumpStart Inc.

JumpStart Inc. has two evergreen investment funds: one for startups in Greater Cleveland and one specifically for women and Black or Latinx-led companies in Ohio.

The Sequoia Fund

The firm's open-ended fund holds positions in some of its companies that have gone public. The evergreen fund structure only applies to its U.S. and Europe operations.

Kiko Ventures

Kiko Ventures is an evergreen venture investor focused on cleantech/climate tech. Kiko Ventures is a highly flexible investment platform that can be a long-term partner to climate tech innovators and often tackles the most difficult and rewarding opportunities.


AENU invests in intentional, inclusive, and ambitious founders who are building impact technologies that have the potential to reduce 100Mt CO2e at scale or to significantly improve the well-being of millions of people around the world.

V3 Ventures

V3 Ventures invests in early-stage, consumer-focused businesses with strong purpose-driven, scalable brands across Europe, India, and the US.

Sutter Hill Ventures

Sutter Hill Ventures primarily invests in early and late-stage technology-based start-ups out of Silicon Valley.

Maverick Ventures

The venture capital arm of Maverick Capital partners with entrepreneurs in the healthcare, software & technology sectors.

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