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What should an LP ask about key-person risk at a first-time venture manager?
a first-time venture manager: Key-person risk concerns continuity of judgment, relationships, and authority when a critical person cannot perform the expected role.
Key-person risk concerns continuity of judgment, relationships, and authority when a critical person cannot perform the expected role. A strong team can still depend heavily on one individual's access or decisions. The agreement determines the actual provisions and consequences.
Start with the decision
Map concentrated responsibilities and test an absence scenario. Review succession, backup access, decision authority, and applicable key-person terms with qualified advisers. Ask which relationships and operating tasks can continue independently.
The illustrative scenario
This is an educational workbook. The company or fund and all numerical inputs below are fictional. They are not ADIN results, customer claims, market benchmarks, or a forecast.
The fictional manager is raising a first independent fund after working on investments at another firm. The pitch includes several prior deals, but the LP has not yet verified the manager's role or permission to use those examples.
A prior employer's portfolio is not automatically an attributable personal track record. Separate sourcing, analysis, investment authority, board work, and realized outcomes for each deal.
Turn the scenario into an evidence decision
Consider a review of a first-time venture manager in which a confident explanation arrives before the supporting records. Start with the first question in the table. Write down what an answer would change: the next interview, the experiment's scope, a request for specialist review, or a decision to wait. A question without a consequence can produce a longer document while adding little understanding.
Next, inspect the record named in the table and record its date, owner, permission boundary, and limitations. Request a role-by-deal table, permissioned references, dated evidence of decisions, and clear realized versus unrealized figures. Keep unavailable evidence visible instead of filling gaps with estimates. If the record contradicts the explanation, preserve both accounts and ask which definition, period, or workflow differs. Do not silently select the version that makes the opportunity look strongest.
Finish with a conditional statement: if the specified evidence supports the claim under these conditions, take the named next step; otherwise investigate the unresolved question. A continuity plan is more useful when it can be enacted by named people with the necessary authority. Do not assume a second team member or an outsourced provider automatically resolves an investment or contractual dependency. This worked exercise is about the decision process. It does not assert that a fictional company has met a real diligence standard or that a template can authorize an investment.
| Item | Illustration |
|---|---|
| Decision question | Which work depends on one person? |
| Case-specific constraint | A prior employer's portfolio is not automatically an attributable personal track record. Separate sourcing, analysis, investment authority, board work, and realized outcomes for each deal. |
| Record to inspect | Request a role-by-deal table, permissioned references, dated evidence of decisions, and clear realized versus unrealized figures. Keep unavailable evidence visible instead of filling gaps with estimates. |
| Comparison to preserve | Compare the proposed independent fund's work with the manager's actual prior responsibilities. Explain where the new role requires capabilities not shown by the old one. |
| Unresolved case question | Which decisions were actually theirs? |
Use this worksheet
Answer the questions with a source, date, owner, and next action. Mark an unknown as unknown. Use public or permissioned information and involve a qualified specialist when a question requires expertise beyond the team’s competence.
- Which work depends on one person?
- Who has backup access?
- Who can make decisions?
- What do the documents provide?
- How is continuity tested?
Questions specific to this scenario
- Which decisions were actually theirs?
- Who can verify the attribution?
- What is missing from the independent operating plan?
Request a role-by-deal table, permissioned references, dated evidence of decisions, and clear realized versus unrealized figures. Keep unavailable evidence visible instead of filling gaps with estimates.
A concrete next test
Choose one successful prior investment and one unsuccessful example from the relevant set. Ask the manager to specify their role and obtain permissioned corroboration. Compare the work shown with the responsibilities they would hold in an independent fund, including decisions not previously theirs.
Interpret the result
A continuity plan is more useful when it can be enacted by named people with the necessary authority. Do not assume a second team member or an outsourced provider automatically resolves an investment or contractual dependency.
Compare the proposed independent fund's work with the manager's actual prior responsibilities. Explain where the new role requires capabilities not shown by the old one.
Sources and method
These primary resources provide background for the concepts. The fictional scenario, calculations, and worksheet are ADIN educational examples; the sources do not report or validate those invented results. Reviewed October 11, 2026.