# What is Key Person Clause? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Funding  
> **Canonical Citation:** [https://spidits.com/startup-glossary/key-person-clause](https://spidits.com/startup-glossary/key-person-clause)

## Definition
A Key Person Clause is a provision in a venture capital fund's agreement that prohibits the fund managers (GPs) from making new investments if designated key partners leave the firm.

## Architectural Mechanics & Deep Dive
A Key Person Clause is a provision in a venture capital fund's agreement that prohibits the fund managers (GPs) from making new investments if designated key partners leave the firm, protecting Limited Partners.

## Industry Applications & Real-World Use Cases
VC fund partnership agreements and LP protection

## Frequently Asked Questions

### Why do LPs demand a Key Person Clause?
LPs invest in a VC fund because of the specific track record and expertise of the founding partners; their departure changes the risk profile.

### What happens when a Key Person Clause is triggered?
The fund's investment period is suspended until a replacement manager is approved or the LPs vote on how to proceed.

## Related Terminology
- [gp](https://spidits.com/startup-glossary/gp)
- [lp](https://spidits.com/startup-glossary/lp)
- [clawback-provision](https://spidits.com/startup-glossary/clawback-provision)

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*From the SPIDITS AI Knowledge Base (300+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*