The private markets have long been an attractive destination for investors seeking long-term growth and portfolio diversification. While private equity and venture capital dominate most conversations, private credit—particularly through Evergreen Fund and BDC structures—has emerged as one of the most compelling investment strategies, and its adoption is picking up.
Private market perpetual capital options like Evergreen Funds have filled funding gaps for high-growth companies that have proven revenue and value. They do not dilute ownership and allow companies to grow without the pressure of pre-set exit timelines. For investors, these vehicles provide an opportunity to access companies with proven potential. Many of them have already taken in significant equity funding and are growing well. From a wealth management standpoint, these investor-friendly assets can provide the potential to enjoy a high level of flexibility and liquidity.
These features solve many of the frictions seen in traditional private equity and private credit vehicles. They are a source of investment simplicity and access, especially for accredited investors seeking consistent exposure to private credit without managing capital calls or long lock-ups.
One reason these funds can provide investors with these distinctive assets is their structure. They are set up as a Business Development Company (BDC), a type of closed-end fund regulated to invest in private businesses while remaining accessible to individual investors.
Because BDCs can raise capital continuously and are required to distribute income, they serve as strong vehicles for private credit—delivering consistent performance without locking up investor capital for years.
For investors seeking reliable, tax-efficient cash flow with built-in protections, Evergreen BDCs present an attractive solution. These funds blend the ability to generate current income, mute volatility by maintaining a relatively low correlation with public markets
Rather than aiming for risk premiums, private credit BDCs deliver stable, consistent performance. It's a strategy that works particularly well within retirement accounts and portfolios focused on wealth preservation and cash flow. Loan structure and underwriting matter in private credit What differentiates successful private credit investments isn't just market timing—it's discipline. At BIP Capital, we focus on:
We also include equity participation in select deals through penny warrants and co-investments, providing potential upside without exposing investors to full equity risk.
As private credit gains ground with investors looking for yield and control, BIP Capital is working to bring the strategy within reach of individuals and their advisors—with lower barriers to entry, quarterly liquidity, access to proven businesses that may be inaccessible otherwise, and a high level of transparency.
AP: We often think of alternative investments as private equity—private stocks, bonds, and so on. But that's only part of the story. There's also private credit and private debt—areas that are often underexplored but offer strong potential for investors.
Mark, thank you for joining us. Can you share a bit about your background and your role at BIP Capital?
MF: Thanks, Alex. I've been at BIP Capital for about a decade. We started primarily with private equity—venture capital, in particular—making early-stage investments in exchange for ownership and then helping those companies scale.
Over the past six-plus years, private credit has become an increasingly important part of our offering. As banks have pulled back from lending to growth-stage companies, private credit has stepped in to fill the gap. We've partnered with seasoned managers—under the brand name Lago—who have operated in this niche market for decades.
AP: Is the shift toward private credit being driven by fewer equity opportunities or more companies preferring loans over giving up ownership?
MF: Both. Entrepreneurs often prefer debt once their businesses mature. Many of the companies we work with have strong revenues—say $60–70M in ARR—and valuations around $200M. At that stage, taking more equity dilutes their ownership. A loan gives them the capital to grow without giving up control.
From our perspective, this creates a lending opportunity in a gap between banks and large multi-billion-dollar private credit funds. These companies are too big for traditional small business loans but too small for big fund deployments. We underwrite loans that meet their growth needs without requiring equity.
AP: Let's talk about risk. In equity, if the company fails, your investment may be worth nothing. In private credit, what safeguards are in place?
MF: We look for businesses with proven traction and real value—usually with substantial equity already invested. We lend against that value, sitting at the top of the capital stack as senior secured lenders. That means if the business is sold or liquidated, we're first in line to be repaid.
We also use covenants—financial and operational guardrails—to maintain visibility and minimize risk. These include maintaining minimum cash balances, revenue growth thresholds, and limits on new borrowing or excessive spending.
AP: What are the typical terms for loans in your funds?
MF: Most loans are floating-rate, typically SOFR plus 6–10%, with three- to five-year terms. There are upfront and exit fees, and sometimes, we include penny warrants for additional upside. On average, investors receive a 10–11% annual current yield, with additional return potential from those warrants or equity co-investments.
We don't aim to generate 10x returns like equity. Our goal is steady, predictable income with low volatility and better risk-adjusted returns.
AP: Most listeners aren't looking to become private credit lenders themselves. How can they access this asset class?
MF: That's where we come in. We offer access through two structures: BIP Evergreen Funds and Lago Evergreen Credit Funds. Both use a business development company (BDC) structure, which is always open and allows accredited investors to invest with as little as $10,000. These are quarterly-close, fully called funds, and shareholders receive 1099s (not K-1s), which simplifies tax reporting.
The structure allows for regular income distributions and optional liquidity via quarterly tenders after the fund matures. The capital stays invested and continues to be redeployed, removing vintage risk and providing stable exposure to the asset class.
AP: Are these loans held to maturity, or do you ever sell them?
MF: We hold them. This is an active management strategy. We're not buying paper and sitting on it. We're deeply involved with our portfolio companies, monitoring performance and engaging as needed. That's why manager experience matters so much.
In fact, many of our new loan opportunities come from referrals by our existing borrowers. That speaks to the strength of the relationships we've built and the value we bring as partners—not just lenders.
AP: Mark, this has been an insightful conversation. Private credit is a powerful tool for investors seeking steady returns in underserved markets. If someone wants to learn more or explore investing, where should they go?
MF: Visit BIP Evergreen Funds or Lago Evergreen Funds. You'll find detailed information and can register for one of our weekly webinars. We're always happy to answer questions.
AP: Thank you again for your time today. This has been the Alternative Investing Advantage podcast. I'm Alex Perny. See you next time
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