Venture capital (VC) firms are pools of private capital that typically invest in small, fast-growing companies, which usually can't raise funds through other means. In exchange for this financing, the VCs receive a share of the company's equity, and the founders of the firm typically stay on and continue to manage the compnay. a. Describe the nature oft eh incentive conflict between VCs and the managers, identifying the principal and the agent. VC investments have two typical components: (1) Managers maintain some ownership in the compnay and often earn additional equity if the company peroforms well; (2) VCs demand seats on the company's board. b. Discuss how these two compnents help address the incentive conflict.