Evergreen funding is a term used to describe the incremental addition of money into a business. Before a business is started or a new product is introduced into the market, the business owner or the investment bank representing the business owner will approach venture capitalists and other investors for financing.
Usually, these investors will provide the company with capital in one lump-sum payment. At this point, the company will invest the capital in short-term securities in order to yield interest. It is customary to make arrangements to receive venture capital funds upfront.
With evergreen funding, however, investors supply the capital in incremental payments throughout the development phase of the company or product. Thus, the company receives money from its investors on a set schedule or as the need for funds arises, and so is never without the "green" the company needs to survive.