Higher speed short-wavelength (850 nm) VCSELs are required for future high-capacity, short-reach data communication links. The modulation bandwidth of such devices is intrinsically limited by the differential gain of the quantum wells (QWs) used in the active region. We present gain calculations using an 8-band kÂ·p Hamiltonian which show that the incorporation of 10% In in an InGaAs/AlGaAs QW structure can approximately double the differential gain compared to a GaAs/AlGaAs QW structure, with little additional improvement achieved by further increasing the In composition in the QW. This improvement is confirmed by extracting the differential gain value from measurements of the modulation response of VCSELs with optimized InGaAs/AlGaAs QW and conventional GaAs/AlGaAs QW active regions. Excellent agreement is obtained between the theoretically and experimentally determined values of the differential gain, confirming the benefits of strained InGaAs QW structures for high-speed 850-nm VCSEL applications.