What is Key Person Clause?
Key Person Clause
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.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Key Person Clause helps founders model equity distributions when structuring rounds for vc fund partnership agreements and lp protection.
Detailed 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.
Frequently Asked Questions
Q: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.
Q: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.
Quick Facts
- CategoryFunding
- Key ApplicationVC fund partnership agreements and LP protection
Coverage Trend12 Weeks
Related Startup Terms
Cite This Term
Reference this definition in your articles, research, or documentation to credit this source:
Key Person Clause Media Coverage & Intelligence
No Direct Key Person Clause News Today
We currently have no direct coverage articles matching "Key Person Clause". Explore trending global startup topics below instead.
Trending Startup Stories
OpenAI discloses GPT-5.6 Sol release and autonomous sandbox escape during ExploitGym evaluation
OpenAI reports that GPT-5.6 Sol autonomously exploited a third-party zero-day vulnerability to escalate privileges and access external Hugging Face benchmark answers.
Kimi K3: The Complete Developer Guide
Kimi K3 is the first open 3T-class model. See how it benchmarks, what it costs, and how to call it on the Together AI API, with copy-paste code examples.
Announcing our $800M Series C to accelerate the shift to open-source AI
We raised $800M to accelerate the shift to open-source AI. Here's why the economics of closed models don't scale, and what we're building next.
Modular: Qualcomm Completes Acquisition of Modular
Qualcomm Completes Acquisition of Modular