Venture capital (VC) firms are pools of private capital that typically invest in small, fast-growing companies that cant raise funds through other means. In exchange for this financing, VCs receive a share of a company's equity, and the founders of the firm typically stay on and continue to manage the company The incentive confict is between the managers, who are the , and venturo captaists, who are the vc investments have two typical components: (1) managers maintain some ownershp in the company and often earn addtional equity if the company performs well; (2) VCs demand seats on the company's board Management ownershp serves to the alignment of the incentives of managers with the incentives of owners