An ultra‐compact (8 µm long) electro‐absorption modulator is presented which is laterally integrated with a 980 nm InGaAs vertical cavity surface emitting laser incorporating a bow‐tie‐shaped oxide aperture. A low driving voltage operation below 400 mV pp for a dynamic extinction ratio of 6 dB and a large signal modulation of up to 25 Gbit/s is demonstrated. The static extinction ratio of over 6 dB can be obtained by applying an extremely low voltage of −200 mV.