Two types of GaN vertical-cavity surface-emitting lasers (VCSELs), with and without lateral optical confinement (LOC) structure, were fabricated and their performances were compared. Compared with the VCSEL without LOC, the device with LOC showed a great improvement in threshold current, slope efficiency, output power and differential quantum efficiency, which was mainly due to the reduction of internal loss. Devices with LOC showed clear and multi-transversal mode structures. However, thermal dissipation became worse. The effects of such a design on thermal resistance and transverse modes were discussed.