Just released: How to raise venture capital in 2023


Death of a Co-Founder: The Importance of Key Man Life Insurance


Key Takeaways

Carl Niedbala - Founder Shield
Carl Niedbala

COO & Co-Founder

Key Man Life Insurance can be touchy subject for most startup founders.  Most of the time it’s a “just-don’t-think-about-it” situation, and the only time the idea even comes up is when it appears on the Series A term sheet.  Entertaining the thought of losing a co-founder is one of the last things any entrepreneur wants to do.

But unfortunately sometimes our worst fears our realized.  Techcrunch recently ran a story about Sébastien Métrot, one of the founders of a startup called Yasound.  In a recent presentation, Métrot shared the struggles he and the company faced when they lost co-founder and CEO Jean-Marc Plueger in a motorbike accident.  

According to Métrot, his co-founder lost sight of the “work/life balance” and invested all of his time and energy into the startup quite literally.  Apparently he was only “sleeping two or three hours a night.”  It’s a sobering story that reminds us how important it is to be fiercely passionate, but also strike a balance.

Métrot shed some light on the issues faced: “‘Without your co-founder, you have to learn overnight to take care of everything,’ Métrot said. ‘There are also many legal issues. Who has to take care of the company? What do we have to do on the inheritance side?’” He went on to mention that the company had not placed key man life insurance on each of the founders.   Since the accident, the VCs that backed Yasound have changed their term sheets to require key man coverage. Now it’s rare to see a VC underestimate the importance of Key Man Life Insurance.  

Undoubtedly, there’s not much that could be done to ease the mental shock of losing his co-founder.  But with the cash injection that a key man life insurance policy could have given to the company, Métrot could have had an easier time finding someone to step in to fill the void and as well as covering the inevitable legal bills.  Money is the last thing you want to be thinking about in this situation, so having extra funds can ease the stress and tension of trying to move forward.  

If you want to learn more about Key Man Life insurance and how it protects you and your company, check out our key man page.  You’ll also learn how Founder Shield can help you take care of this in 5 minutes and keep you thinking happy thoughts.


Related Articles

key person insurance
April 20 • Directors & OfficersKey Man

Key Person Insurance & CFI for Late-Stage Companies

Late-stage companies have plenty at stake, especially if a critical team member passes away. These policies support momentum after a loss.

contract protection insurance featureed
April 4 • Key Man

Key Person Insurance Alternatives

Key Person Insurance can be a valuable policy for when the unthinkable happens, but it has its disadvantages. We examine Contract protection insurance (“CPI”) and other alternatives.

key man vcs wrong post
March 6 • Key Man

Key Man Insurance: VCs – You’re Doing it Wrong

Given our relationships with a lot of early stage VCs in around the country, we do a ton of Key Man Insurance policies.  If you’re unfamiliar with these, Key Man policies are basically a life insurance policy that pays out to the company if anything happens to the “Key Man.”  And if you’re unfamiliar with

stress free key person insurance post
February 16 • Key Man

The Easiest Way to Get Key Person Insurance for your Business

Many VC investors require founders going through an institutional round of funding to get key person insurance. For those of you that are nearing the close of your first big seed or series A round, there are two routes you can go in procuring your key person insurance policy: The traditional route or the Founder Shield

linkedin sales navigator unsplash scaled
January 17 • Key Man

We created a new Key Man insurance product…and it’s awesome.

Key man insurance for startups doesn’t really exist in the life insurance markets.  There are a few reasons for this and I’ll explain the big ones.