What should an LP ask about key-person risk at a seed venture fund?

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 targets companies with an initial customer base and plans to join priced rounds. It uses larger initial checks than the pre-seed example and expects a smaller portfolio. Co-investor access is part of the thesis.

An attractive round does not prove allocation access or consistent decision quality. Verify what the manager could actually invest, the price paid, and the ownership maintained.

Turn the scenario into an evidence decision

Consider a review of a seed venture fund 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 executed investment records where available, a complete portfolio schedule, reserve assumptions, and references about the manager's role. Keep proposed deals separate from completed investments. 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.

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.

1. Which work depends on one person?
2. Who has backup access?
3. Who can make decisions?
4. What do the documents provide?
5. How is continuity tested?

Questions specific to this scenario

• Which allocations were actually obtained?
• What changes when round sizes rise?
• How are reserves prioritized?

Request executed investment records where available, a complete portfolio schedule, reserve assumptions, and references about the manager's role. Keep proposed deals separate from completed investments.

A concrete next test

Select one completed investment and one opportunity where the manager could not obtain the desired allocation. Ask how access, price, and ownership affected the decision. Include both examples when evaluating whether the proposed check sizes and company count are executable.

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 strategy with actual check sizes and capacity. Identify whether the model relies on ownership or access that has not yet been demonstrated.

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.

• ILPA: Emerging Manager Toolkit
• Investor.gov: Private Equity Funds