Venture capital firms attempt to overcome the principal-agent problem by A. holding large equity stakes in the firms they invest in. B. avoiding investing in common stock.
A. holding large equity stakes in the firms they invest in
Explanation:
The venture capital is a form of a private equity funding and is at the startups and the early stage and seen in emerging companies and has been deemed to have huge growth potential.
Are seen in the exchange of the equity or the ownership stake and is based on the innovative technology and thus they invent a larger holding in the equity stakes of the firms they invest in.
