Recently we reported the first AlGaAs-GaAs-GaN heterojunction bipolar transistor (HBT), a device that potentially combines the high-breakdown voltage of an n-GaN collector with the high mobility of an AlGaAs-GaAs emitter-base. Because of the high degree of lattice mismatch between GaAs (lattice constant of 5.65A) and GaN (3.19A), we formed these devices through wafer fusion, also called direct wafer bonding. Measurements on the first generations of wafer fused HBTs revealed good current modulation, with modest output current (0.83 KA/cm2) and a current gain of 1.2. Limitations to the current gain may be related to traps and defects introduced by the fusion process, or may be a consequence of the natural conduction band offset between GaAs and GaN, which is not well known. This paper describes our new HBT structure that included a thin (20nm) uid-GaAs base-collector “setback” layer. The setback layer shifted the fused GaAs-GaN interface slightly into the collector. This new HBT structure also incorporated a reduced base thickness of 100 nm. HBTs with setback layers demonstrate increased output current (1.7 KA/cm2) and increased current gain (1.9).