Continuation funds are becoming increasingly popular in Europe, with fundraising for these vehicles continuing to rise.
So far this year, continuation funds have raised EUR 5.3 billion as of June 16, 2025, already nearly 70% of the 2024 record EUR 7.7 billion, according to a new report by Pitchbook. This puts the market on pace to reach a new record in 2025.
Continuation funds are a type of secondary market private equity (PE) vehicle designed to extend the holding period of one or more assets from an existing fund that has reached or is approaching the end of its lifecycle.
Normally, a venture capital (VC) or PE fund has a fixed lifespan. However, sometimes, the best-performing startups need more time to mature or exit.
Continuation funds solve this challenge by spinning out these assets into a new vehicle. New or existing investors purchase the stake from the original fund, giving the original investors an opportunity to cash out, while allowing the general partner (GP) or the fund manager and rollover investors to hold the asset longer and maximize its value.
According to PitchBook, the growing popularity of continuation funds in Europe reflects the pressure on GPs to provide liquidity to LPs while retaining valuable assets, especially when traditional exit routes, such as mergers and acquisitions (M&A) or initial public offerings (IPOs), are limited.
However, the practice’s growth comes with caution. Jonathan Graham, head of investment bank Lincoln International’s private funds advisory group in Europe, warns of the overuse of continuation funds, stressing that GPs should only use these vehicles if they genuinely believe the assets can grow further and add value, instead of using them solely to raise capital.
If GPs roll lower-quality or underperforming assets into continuation funds just to keep capital flowing, investors may end up stuck with assets that are unlikely to grow in value. This could lead to poor returns and damage trust in the continuation fund market.
Ravi Chopra, co-leader of the secondaries practice at law firm Goodwin, shares a more optimistic view, arguing that continuation vehicles remain an effective way for fund managers to exit an asset, regardless of quality.
“If there is no M&A purchaser, and we are in an environment where LPs desire liquidity, it makes sense that you would embrace the full spectrum of potential buyers from a GP’s perspective, acting in the investor’s best interests to try and maximize the chances of an exit,” Chopra told PitchBook.
Fundraising for continuation funds has surged in Europe in recent years. In 2023 and 2024, European continuation funds raised more than EUR 7.5 billion annually, a 36-fold increase from EUR 0.2 billion in 2019, and a significant 70.5% jump from EUR 4.4 billion in 2020.
This growth has been partly driven by Europe’s maturing VC funds. Many of these funds raised in the early to mid-2010s and are now reaching the end of their terms. However, Europe’s exit market can be slower than in the US, a challenge that’s compounded by ongoing macroeconomic uncertainty.
Regulatory complexity further extends exit timelines, especially in sectors like fintech. Many promising fintech companies need longer runway for regulatory approvals, major licensing, and international expansion.
Fintech, one of the most mature tech sectors in Europe, has attracted over US$100 billion in investment since 2010 across more than 15k funding rounds, according to Sifted. Today, the sector is primed for exits, particularly through acquisitions.
So far this year, there have been 62 fintech acquisitions, slightly up from 57 during the same period last year, according to the media outlet. Payments has been the leading fintech segment, with 12 buyouts so far. Wealthtech follows closely with 11 deals, while CFO tech stack startups have seen seven acquisitions.
Key fintech acquisitions include:
Freetrade, a commission-free investment platform from the UK acquired for GBP 160 million by IG Group Holdings;
Helio, a crypto payments company acquired by US-based crypto payments infrastructure company MoonPay for a reported US$175 million; and
Yokoy, a Zurich-based spend management automation platform for small and medium-sized enterprises (SMEs) acquired by travel management startup TravelPark.
Featured image: Edited by Fintech News Switzerland, based on image by EyeEm via Freepik
