Legal & Compliance
Operating Agreement
The governing document for an LLC that outlines ownership, management structure, profit distribution, and member rights.
An operating agreement is the primary governance document for a Limited Liability Company (LLC) — the LLC equivalent of corporate bylaws and a shareholder agreement combined. For VC fund structures organized as LLCs, the operating agreement (or Limited Partnership Agreement if a LP) governs: LP and GP rights and obligations, capital contribution mechanics, distribution waterfalls, management fee terms, carried interest calculations, voting rights, transferability of interests, and dissolution procedures. Operating agreements for VC funds are highly negotiated documents, often running 60-100+ pages. LPs' attorneys review the operating agreement carefully as part of fund due diligence. Side letters may modify operating agreement terms for specific LPs.