Continuation Vehicles and the New Liquidity Equation
Summary: Continuation vehicles are no longer a niche solution, as they are reshaping liquidity in venture capital. GP-led continuation volume surged from $26 billion in 2019 to $75 billion in 2024, with $47 billion already recorded in the first half of 2025. Venture and growth, once marginal, now account for 8 percent of GP-led deals, matching all of last year’s share. Healthcare, credit, and fintech-heavy venture portfolios are driving adoption, as GPs seek more time and LPs demand liquidity. The question now is whether these structures will redefine exits or delay them.
In venture capital, the pursuit of liquidity has always been the defining challenge. Historically, capital returned through two familiar routes: the initial public offering (IPO) and the trade sale. In 2021, the venture market celebrated an unprecedented IPO wave, only to face its reversal in 2022–23, as interest rates rose and public markets repriced growth assets. Since then, exits have slowed to a crawl, with venture-backed IPOs nearly absent in 2023 and modest at best in 2024.
This drought has forced fund managers to engineer liquidity rather than wait for it. The most notable innovation has been the rise of the GP-led continuation vehicle (CV), a secondary structure in which a general partner transfers one or more portfolio assets from an existing fund into a newly created vehicle, offering liquidity to limited partners (LPs) while retaining exposure for those who wish to roll forward.
Recent developments, including Performance Equity’s clean-up of an older venture portfolio in partnership with Partners Group, illustrate just how far this tool has penetrated venture capital. According to Jefferies, venture and growth represented 8 percent of GP-led volume in the first half of 2025, matching the entirety of 2024’s figure. This signals a shift: continuation vehicles are no longer experimental; they are becoming mainstream in venture capital.
Historical Context: From Buyout Innovation to Venture Adoption
Continuation vehicles are not new. In private equity buyouts, they gained traction after 2017 as managers sought to hold onto prized assets longer than the typical fund life allowed. By 2020, single-asset CVs had emerged as a dominant format, often backed by large secondary investors such as Coller Capital, Blackstone Strategic Partners, and Lexington.
The venture industry, however, was slower to adopt. For years, continuation structures seemed incompatible with the perceived binary nature of venture outcomes. Either a company exited spectacularly, or it failed. But as venture funds matured and portfolios accumulated companies in need of more time, the model migrated. By 2023, Jefferies estimated GP-led volume at $52 billion, rising to $75 billion in 2024, with CVs representing over 85 percent of that activity. Venture’s share of this pie remains small but is accelerating.
Case Studies: Sector-Specific Applications
Healthcare and Healthtech
Healthcare has proven a natural fit for continuation vehicles. QHP Capital’s CV around Azurity Pharmaceuticals, New Mountain Capital’s continuation of Real Chemistry, and Motion Equity’s €215 million CV for Olyos are emblematic. These are single-asset transactions built around high-conviction companies in capital-intensive sectors where time horizons stretch longer than a conventional fund life.Credit and Private Lending
The private credit market is experiencing a parallel surge. Credit GP-leds grew from $6 billion in 2023 to $10 billion in 2024, with expectations of $17 billion in 2025. Managers are deploying CVs to hold performing loans or structured equity positions, offering LPs the option to exit while raising fresh capital for follow-ons. The liquidity mismatch in credit mirrors venture: investors want shorter duration, while managers see extended upside.Venture and Fintech
Fintech, despite being one of the most capitalized venture verticals over the past decade, has not yet seen a wave of fintech-only continuation vehicles disclosed publicly. Instead, fintech exposure appears inside broader venture CVs. For instance, Trinity Ventures’ $435 million multi-asset CV in 2024 transferred 15 companies from Fund XI into a new structure, several of which were fintech-related. Larger franchises, such as Insight Partners, Lightspeed, NEA, and General Catalyst, all heavy fintech investors, have run CV processes as well. Though public disclosures rarely isolate fintech, it is clear that high-value fintech assets are part of these transactions.
Market Dynamics: Why LPs and GPs Diverge
Continuation vehicles reveal a fundamental asymmetry between LPs and GPs.
For LPs, the offer of liquidity is often welcome. Houlihan Lokey data show that in early 2025, 85–92 percent of LPs opted for cash-out rather than roll-over, up from 75–80 percent in 2024. In an era where many institutions face denominator-effect pressures, liquidity today is often more valuable than uncertain returns tomorrow.
For GPs, CVs are attractive precisely because they prevent forced exits. They allow managers to extend exposure to companies they believe will realize greater value in the next three to five years. At the same time, CVs provide GPs with additional fee streams, fresh capital for follow-ons, and the reputational benefit of “supporting” star portfolio companies.
The result is an inherent tension: LPs’ desire for liquidity versus GPs’ desire for duration. Regulators and LP associations (such as ILPA) are increasingly attentive to these conflicts, particularly around valuation fairness.
Risks and Scrutiny
Continuation vehicles are not without controversy. Critics argue they can mask valuation gaps, delay realizations, and exacerbate conflicts of interest, since the GP is effectively negotiating with itself. High-profile failures—such as Clearlake’s continuation of Wheel Pros, which later entered bankruptcy-underline these risks.
For venture-backed companies, the stakes are higher still. Unlike buyout-backed businesses with stable cash flows, venture assets often face volatile valuations and binary outcomes. Extending their life via continuation vehicles can either create extraordinary upside or compound losses.
Implications for Sector-Specific Funds
Fintech: Expect fintech-heavy CVs to grow. As payments, neobanking, and insurtech companies mature, many will outlive the vintage of their original funds. Continuation structures provide a bridge, especially when IPO markets remain subdued.
Healthcare: Already a proven use case. The capital intensity and regulatory timelines of healthtech make continuation vehicles a logical solution.
Credit: Perhaps the fastest-growing segment. The repeatable, yield-based nature of credit assets lends itself well to GP-led extensions, especially as institutional investors allocate more to private credit.
What This Means for Executives and Investors
For LPs: CVs offer a liquidity choice but demand careful evaluation of valuation methodology and alignment of interest. Executives should scrutinize whether the price reflects market reality or GP optimism.
For GPs: Continuation vehicles are now a central tool in portfolio management. The reputational risk of structuring them poorly is as high as the upside of executing them well. Transparency, third-party valuation, and LP governance are critical.
What This Mean for Proptech Venture
The emergence of continuation vehicles in venture capital has clear implications for the proptech sector. While no continuation vehicle has yet been publicly reported as exclusively proptech-focused, the structural logic applies seamlessly. Proptech companies often operate on longer development timelines, from regulatory approvals to integration with large real estate operators, and require capital-intensive scaling to reach profitability. These characteristics mirror the healthcare and infrastructure sectors, where continuation vehicles are already commonplace.
For fund managers, continuation structures could offer a mechanism to support late-stage proptech assets that are too mature for their original venture funds yet not ready for IPO or acquisition. For investors, such vehicles provide a way to gain extended exposure to high-conviction companies while simultaneously offering liquidity options for LPs who prefer to exit.
In practice, this could mean that as the first generation of dedicated proptech funds approaches the end of their life cycles, with relatively few breakout exits, continuation vehicles may become a practical tool to extend ownership in high-conviction assets. Areas such as smart building platforms, construction technology, and fintech-adjacent real estate services are capital-intensive and often require longer horizons to reach scale. For managers, continuation structures offer a way to avoid forced sales at discounts and preserve upside, while giving LPs a liquidity option. As secondary markets become more comfortable with sector-specific CVs, proptech is likely to follow healthcare and credit in adopting this model, making dedicated proptech continuation vehicles a plausible next step.
