MB on VC: Why Permanent Capital Funds are a Choice Alternative for Founders and Investors

I’ve been involved in venture funding and wealth building for more than 20 years – almost the entire history of the Venture Capital industry, which is only around 25 years old. In that time, I’ve become closely involved with a plethora of investment structures – some better than others.  

If you’ve been part of any of our events or webinars over the past six months or so, you’ve heard about one of them from us. The BIP Ventures Evergreen BDC is a completely innovative investment structure that we have launched to acquire equity positions in the most innovative companies in North America, help to grow those promising businesses over extended timeframes, and in return, strive to deliver a better risk-reward product for more investors. One of the things that makes the Evergreen BDC so distinctive is that it is a Permanent Capital Vehicle.

Contrary to the natural question – Permanent Capital does not mean an investor is ‘stuck’ in the fund forever, with no opportunity for liquidity events. On the contrary, funds like the Evergreen BDC offer shorter liquidity windows. It means we are not constrained by set exit timelines. Our teams can spend the time needed to provide capital and support to high-potential businesses that have great potential to become sustainable leaders.

Because Permanent Capital prioritizes long-term value creation and stability, it’s not surprising that these vehicles have gained popularity in recent years. The flexibility and extended timeframes make these alternative funds equally attractive to founders and their management teams, and to investors who want a more sustainable approach than what is offered by traditional venture funds. ‍

The Appeal of Permanent Capital for Founders

For founders, balance is a key part of the appeal of Permanent Capital. A PCV offers strategic guidance and support without degrading any autonomy or decision-making authority. Unlike traditional private equity funds that often seek quick exits and short-term gains, Permanent Capital funds focus on generating consistent, long-term returns. This extended cadence aligns well with the goals of founders who are working to build a business that can stand the test of time.

For startup management teams, Permanent Capital funds improve ownership and extend the company’s investment horizon. Because they are not constrained by the demands of short-term financial metrics, founders and their leadership teams can keep their focus on long-term value creation. While valuable for any company striving to build and scale, the latitude is particularly beneficial for startups in industries that require significant capital investments or have long development cycles. Either way, a Permanent Capital structure gives management more freedom to make decisions that are in the best interests of the business over the long term. ‍

The Appeal of Permanent Capital for Investors

From an investor perspective, Permanent Capital funds have several advantages. First, because of the lower pressure created by set exit timeframes, these funds typically have a more diversified portfolio of investments. Besides offering more chances for investors to align their capital with their interests, diversification also can help mitigate risk.  

PCVs support a more resilient investment strategy, particularly in uncertain market conditions – which are almost sure to occur over the 10-15-year timeframe that is common for a Permanent Capital investment. The prioritization of long-term value creation rather than short-term gains is attractive to investors who want stable, predictable cash flows and lower volatility compared to traditional private market equity investments. The appeal is particularly notable for institutional investors looking to allocate capital to alternative asset classes that offer attractive risk-adjusted returns over the long term.

The rise of Permanent Capital funds represents a shift toward a more sustainable and patient approach to investing that benefits founders and management teams, and investors.

With their longer investment horizon, stability of ownership, risk mitigation, and focus on sustainable value creation, these alternative funds aren’t going anywhere. It may be one of the best sources of fuel for the Innovation Economy flywheel. And I see it as a source of incredible outcomes for everyone involved. If you want to learn more about Permanent Capital and the Evergreen BDC, join one of our upcoming webinars or grab time with us.