GP-Led Secondary
A transaction initiated by the fund manager to provide liquidity to LPs while retaining portfolio companies.
Definition
A GP-led secondary (also called a continuation fund) is a transaction where a fund's general partner creates a new fund vehicle to acquire assets from the existing fund. Existing LPs can choose to cash out or roll their interest into the new vehicle. This allows the GP to continue managing promising investments beyond the original fund's life while offering liquidity to LPs who want it.
Why it matters
GP-led secondaries can extend the holding period for your company's shares. If your company's VC moves their position into a continuation fund, it means the VC believes the best returns are still ahead and is not pressuring for an immediate exit.
Example
A VC fund is 10 years old and holds a large position in your pre-IPO company. Rather than forcing a sale, the GP creates a continuation fund, offering LPs the choice to cash out at $50M or roll into the new fund and wait for the IPO.