---
title: "What Is Continuation Fund?"
term: "Continuation Fund"
description: "A continuation fund is a new investment vehicle that buys and holds selected assets from an existing fund, giving LPs liquidity choice while the GP continues managing those companies."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/continuation-fund
---

# What Is Continuation Fund?

> A continuation fund is a new investment vehicle that buys and holds selected assets from an existing fund, giving LPs liquidity choice while the GP continues managing those companies.

**Continuation fund** is a GP-led transaction where assets transfer from an aging fund into a newly raised vehicle, often with LP choice to sell, roll, or mix.

## How it works

The GP selects one or more portfolio companies—usually mature winners—and negotiates a sale price from the old fund to the continuation fund. New and existing capital funds the purchase; proceeds distribute to selling LPs. Rolling LPs continue exposure; exiting LPs get liquidity before a traditional exit. Independent fairness opinions and LPAC review address conflicts. Pricing, fee reset, and carry terms differ from the legacy fund. More common in private equity; venture and growth managers use variants when IPO or M&A timing is unclear but the asset still has upside. Founders may see board continuity or refreshed governance depending on buyer composition.

## Why it matters

- **Founders:** Your investor may remain through a continuation fund instead of pushing a near-term exit—clarify support for follow-ons and timeline expectations.
- **Investors (LPs):** Liquidity option versus continued illiquidity; diligence focuses on pricing fairness and GP incentive realignment.
- **GPs:** Extends hold on high-conviction assets while returning capital to LPs who want out—manages DPI and fund life limits.

## Common mistake

Assuming continuation funds always benefit founders. New fee layers, leverage, or pressure to monetize later can change investor behavior versus the original fund.

## Related ideas

Continuation vehicle, GP-led secondary, fund restructure, DPI, and LP roll are closely related terms.

## FAQ

### What is a continuation fund in simple terms?

The GP moves one or more portfolio companies into a fresh fund so they can keep owning them. Existing LPs can cash out or roll into the new vehicle.

### Why does a continuation fund matter?

For LPs, it offers liquidity without forcing a sale. For founders, it may mean the same GP stays on cap table longer—or new ownership with different governance.


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Source: https://venturecapitaltracker.com/glossary/continuation-fund