Trevor Lee

Most people compare VC, PE, and SPVs, but almost no one talks about the one structure that quietly outperforms them all for distressed acquisitions: The HoldCo (Evergreen Model) A HoldCo isn’t just “another fund structure.” It’s an operating system that solves the biggest constraints traditional funds face: 1. Internal capital market = faster compounding When one OpCo generates profit, that capital can be up streamed to the HoldCo and redeployed into the next deal within days i.e. continued velocity - No waiting on new fundraising cycles. - No expensive debt required to keep momentum. 2. True risk ring-fencing (with control) Each OpCo is legally siloed, liabilities, contracts, and ops, etc. But the HoldCo still holds board + control rights to execute a turnaround when needed. - One struggling asset never drags down the entire portfolio. - This is almost impossible in a typical minority VC position. 3. Shared services = instant margin lift Centralizing finance, legal, GTM, AI ops, vendor contracts, hiring, etc. reduces duplicate overhead across every subsidiary. - Your gross-to-net conversion goes up. - Your burn per OpCo goes down. - Your turnaround window gets shorter. This is where most rollups and PE platforms miss the opportunity. 4. Financing flexibility traditional funds don’t have You can layer: - OpCo senior / asset-backed lines - HoldCo-level subordinated credit - Equity only where it truly compounds - No cross-defaults. No forcing a company to raise when it isn’t ready. 5. Clean optionality on exits You can: - Sell one OpCo - Recapitalize it - Spin it out - Or hold it indefinitely Without disturbing any other company in the portfolio. That gives you multiple “shots on goal” for liquidity, not one binary fund outcome. 6. Evergreen + recycling = NAV compounding machine A HoldCo naturally pairs with evergreen capital: - Realize gains or dividends from one OpCo → recycle → acquire → scale → repeat. This is how you compound value instead of just marking it. Why this matters now: Distressed startups, slowed-growth SaaS, and overlooked “zombie” companies don’t fit VC or PE structures well. But inside a HoldCo? They become assets that can be stabilized, optimized, and compounded. The model isn’t new. But in this market, it will become something worth understanding. #startups #venturecapital #fundraising #limitedpartners #continuationfunds #bendingspoons #zombiestartups #distressed

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