A multi-junction VCSEL is formed by as a compact structure that reduces lateral current spreading by reducing the spacing between adjacent active regions in the stack of such regions used to from the multi-junction device. At least two of the active regions within the stack are located adjacent peaks of the intensity profile of the VCSEL, with an intervening tunnel junction positioned at a trough between the two peaks. The alignment of the active regions with the peaks maximizes the generated optical power, while the alignment of the tunnel junction with the trough minimizes optical loss. The close spacing on adjacent peaks forms a compact structure (which may even include a cavity having a sub-λ optical length) that lessens the total path traveled by carriers and therefore reduces lateral current spread.