Fund Structure
Key Person Event
Last updated
Quick Answer
A triggering event that occurs when designated key persons are unable to devote sufficient time to the fund, typically suspending the investment period.
What it is
A key person event is triggered when one or more designated key persons — typically founding GPs or senior partners — are unable to devote a specified minimum percentage of their professional time to the fund due to death, disability, departure, or other circumstances. When triggered, the fund's investment period is typically suspended, and the GP cannot make new investments until the situation is resolved or LPs vote to continue.
In Practice
When the founding GP suffered a health emergency requiring extended leave, a key person event was triggered, suspending the fund's ability to make new investments. The LPAC met within 30 days and voted to extend the suspension for six months pending the GP's recovery, rather than permanently terminating the investment period.
Operational context
What good looks like
The term is tied to a real workflow, not just a definition.
Ownership, timing, and evidence are clear.
The reader can tell what decision the concept supports.
Related terms point to the next useful explanation.
Why It Matters
Key person provisions protect LPs from having their capital managed by someone other than the individuals they evaluated during fundraising. They're one of the most important governance mechanisms in fund structures.
VC Beast Take
The definition of a key person event is heavily negotiated. GPs want narrow definitions (death or permanent disability only), while LPs push for broader triggers (including departure or reduced time commitment). The right answer depends on the fund's depth of talent beyond the named key persons.
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Term Family
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Related Questions
Browse all questions →Frequently Asked Questions
What is Key Person Event in venture capital?
A key person event is triggered when one or more designated key persons — typically founding GPs or senior partners — are unable to devote a specified minimum percentage of their professional time to the fund due to death, disability, departure, or other circumstances.
Why is Key Person Event important for startups?
Understanding Key Person Event is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Key Person Event fall under in VC?
Key Person Event falls under the fund-structure category in venture capital. This area covers concepts related to how venture capital funds are organized, managed, and governed.
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