Venture Capital Limited Partnership Agreement Sample

When it comes to venture capital investments, limited partnership agreements (LPAs) are essential documents outlining the terms and responsibilities of all involved parties. These agreements typically detail the investment structure, terms of compensation, and distribution of profits and losses among venture capitalists and limited partners. In this article, we`ll examine a sample venture capital limited partnership agreement.

Before we dive into the specifics of a sample LPA, let`s touch on the basics. Venture capital LPAs typically involve two primary parties: general partners and limited partners. General partners are typically the investors, responsible for raising capital and making investments. Limited partners are typically passive investors, contributing capital but having no decision-making power in the investment process.

Now, let`s take a look at our sample LPA.

Introduction and Definitions

The first section of an LPA will typically provide an introduction, outlining the purpose of the agreement and the parties involved. This section may also provide definitions of key terms used throughout the document.

Capital Contributions

The capital contributions section outlines the amount and timing of capital contributions necessary to form the partnership. This section typically outlines the obligations of the limited partners and general partners.

Management and Operation of the Partnership

This section will detail how the partnership will be managed and operated. It may outline the responsibilities of the general partner, such as conducting due diligence on potential investments and making investment decisions, and the responsibilities of the limited partners, such as providing capital and receiving distributions.

Distribution of Profits and Losses

This section outlines how profits and losses will be distributed among partners. It may detail the distribution of carried interest, the portion of profits allocated to the general partners as compensation for managing the partnership.

Term and Termination

This section outlines the term of the partnership and the circumstances under which it may be terminated. It may also outline the process for dissolving the partnership.

Confidentiality and Non-Circumvention

This section typically includes confidentiality and non-circumvention agreements, outlining the restrictions on disclosing confidential information and the non-compete obligations of the partners.

Indemnification

The indemnification section outlines the rights and obligations of the partners in case of losses or liabilities incurred by the partnership.

These are just a few examples of sections commonly found in a venture capital limited partnership agreement. While the details of each LPA will vary depending on the unique circumstances of each partnership, it`s essential to ensure that the provisions are clear, concise, and legally sound. As such, it`s important to consult with legal professionals experienced in venture capital investment before drafting or entering an LPA.

In conclusion, a venture capital limited partnership agreement is a crucial document outlining the terms, responsibilities, and compensation of venture capitalists and limited partners. An LPA typically includes provisions for capital contributions, management and operation of the partnership, the distribution of profits and losses, and indemnification. While each LPA may be unique, it`s important to ensure that the provisions are legally sound and clearly defined.