1a. Why do venture capital companies prefer to advance money in
stages?  If you were the management of Marvin Enterprises, would you
have been happy with such an arrangement? With the benefit of
hindsight did First Meriam gain or lose by advancing money in stages?

b. The price at which First Meriam would invest more money in Marvin
was not fixed in advance.  But Marvin could have given First Meriam an
option to buy more shares at a preset price.  Would this have been
better?

c. At the second stage Marvin could have tried to raise money from
another venture capital company in preference to First Meriam.  To
protect themselves against this, venture capital firms sometimes
demand first refusal on new capital issues.  Would you recommend this
arrangement?

Jaemarie --

The introduction to this paper's a good resource here:
campus.hec.fr/profs/hege/papers%5Cventure.pdf

Google search strategy:
"venture capital" + "agency problem"

Best regards,

Omnivorous-GA