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Standard legal documents assume tech execs are men. That could soon change

Venture capital is a crucial part of the technology and biotechnology fields, providing early fuel to companies trying to exploit undiscovered opportunities, but in both industries, diversity is a trouble spot.David L Ryan/Globe Staff/Globe Staff

There’s a phrase in the venture capital business for a person who’s so important that their business might collapse without them: “key man.” The term shows up in documents when firms raise money, when they invest in startups, and when those businesses get acquired.

Those words also highlight one of the technology industry’s greatest trouble spots. Implicit in “key man” is the assumption that important executives are men. And in a field that is desperately struggling to diversify its ranks, that’s not a message anybody wants to send.

Last week, a group of influential venture capital players, including the Boston investment firm Cambridge Associates, said they’d no longer call anyone a “key man.” In legal documents, they would instead use the term “key person.”


“It’s clear at this point that diversity of thought, diversity of opinion, inclusive behaviors tie directly to better investment results,” said Steve Nelson, chief executive of the Institutional Limited Partners Association, a trade group for investors in venture and private equity firms.

He said the old term is a “subtle reinforcement” of the imbalance in the industry.

Venture capital is a crucial part of the technology and biotechnology fields, providing early fuel to companies trying to exploit undiscovered opportunities. The change would affect many venture funds and the startups they support. It will also touch many other firms — including those funded by private equity firms that buy into more mature businesses, including those outside the tech industry.

Sarah A. Downey, principal at the Cambridge venture firm Accomplice, said “key man” has jumped out at her when she’s seen it in documents.

“There’s a piece of you that’s like, ‘I don’t fit in this,’ ” Downey said. (Accomplice has been using “key person” for several years.) “It’s not overt sexism, and it’s nothing that’s designed to necessarily make you feel excluded, but there’s a twinge of ‘I don’t belong’ when you see something like this.”


But Downey, who is also cofounder of Rev, an organization that promotes and mentors emerging women executives, said wording that’s more sensitive will mean only so much if there is not a sustained effort to increase representation in both the venture capital and high-tech industries.

“The real question is how many women at venture firms are ‘key people,’ not what you call them,” she added in an e-mail.

Progress across the technology industry has not been encouraging, even as the field has gone through years of criticism over its inclusion and treatment of women.

In addition, few venture firms have women in decision-making roles. The advocacy group All Raise reports that only 9 percent of the people who write checks at US venture capital funds are women.

And few recipients of venture funding are women executives. American venture investors put $15.8 billion into companies with women founders in 2018, according to the data provider PitchBook. That’s a modest increase over 2017, but only a small portion of the $130.9 billion in overall venture investment last year.

Lakshmi Balachandra, an assistant professor of entrepreneurship at Babson College, said that women entrepreneurs won’t notice the new gender-neutral language unless a venture fund agrees to invest in their businesses.

“So I don’t care if it says ‘key man’ or ‘key person.’ It means I’m getting funded,” Balachandra said. She described the change in nomenclature as “a relatively simple fix that makes it look like you’re making meaningful change.”


Jeffrey L. Quillen, a senior partner in the business department at the Boston law firm Foley Hoag LLP, has been doing venture deals since 1991 and said the term “key man” often goes into documents without much thought about its social implications.

Investors use the term when they’re buying into a startup, as a way of requiring the company to take out life insurance on top executives whose loss could significantly affect the firm’s prospects. Investors in venture and private equity funds often use “key man” in a similar way. And when one company buys another, the acquiring firm often contractually obligates certain “key men” to come along.

Quillen said he couldn’t recall being questioned about the phrase, even when the documents have applied it to women, but he said there’s no legal reason that the noun has to be gendered.

“It’s a relic,” he said.

Jennifer Lum, cofounder of the Cambridge artificial intelligence startup Forge.AI, said she’s seen the term “key man” in documents referring to her. It’s a small indignity like many faced by women in business, she said.

“As a woman, I think there are several such terms that are anchored in the word ‘man,’ rather than the word ‘person’ or something more gender-neutral, that women need to learn to tolerate,” she said. “It is jarring at times to read the word and understand that it’s rooted in a different place.”


Lum said she hopes the venture capital industry’s move on “key man” leads to other changes — like an end to the persistent use of chairman to refer to the leader of a board of directors.

Emily A. Brewster, associate editor at the dictionary publisher Merriam-Webster Inc., said gender-neutral language began to catch on in the late 20th century. But she said the suffix “person” has also had some issues.

“It’s a little long as suffixes go, and perhaps calls too much attention to itself,” she said in an e-mail. “That’s not to say that ‘key person’ won’t be successful as a word. I note that ‘effort-hour’ really hasn’t caught on, but ‘person-hour’ is an established alternative to ‘man-hour.’ ”

Nelson, of the Institutional Limited Partners Association, cautioned that the organization does not expect the change of a word to make a huge difference on its own.

But he said it represents a change in attitude that he hopes will mark a real shift.

“This is part of a broader conversation that we are having for our members about how to advance the industry as a whole,” he said. “What we want to do is foster a much more robust conversation.”

Andy Rosen can be reached at andrew.rosen@globe.com.