Continuation Fund

A continuation fund is a new vehicle a GP raises to buy one or more assets out of an older fund, backed by secondary investors, giving existing LPs the choice to cash out or roll into the new vehicle. Long a buyout tool, it has arrived in venture as funds hit year twelve still holding their best companies. Because the GP sits on both sides of the trade, price discovery and LP consent are the whole game — done well it extends compounding, done badly it looks like marking your own homework.