What is an evergreen fund?

Traditional VC funds are "closed-end" vehicles: they raise a fixed pool of capital, deploy it over a few years, return capital to LPs as investments exit, and then wind down — typically within ten years. An evergreen fund breaks this structure. Instead of winding down, it takes the proceeds from exits and reinvests them, allowing the fund to operate indefinitely.

The primary advantage of an evergreen structure is continuity. There's no pressure to exit good investments prematurely to return capital to LPs before a fund's end date. A traditional ten-year fund might be forced to sell a position in a great company just to meet legal wind-down obligations — even if holding longer would generate better returns. Evergreen funds don't face this pressure.

Evergreen funds are also simpler for LPs in some ways: they buy in at net asset value and can often redeem (exit) on a schedule without waiting for the fund to wind down. This liquidity profile is attractive to family offices and smaller institutions that can't easily ride out a ten-year illiquid commitment.

The trade-off is performance attribution complexity. Because capital is continuously recycled, measuring IRR or MOIC (the standard VC return metrics) is harder. You can't easily say "this fund returned 3x over its life" because there's no defined "life." This makes benchmarking and LP reporting more complex.

Prominent evergreen vehicles include Sequoia's Capital Fund (announced in 2021) and various family-office investment structures. The trend toward evergreen structures signals a maturation of the VC industry — as the asset class grows, pressure mounts to modernize fund structures that haven't changed much since the 1970s.