At the second stage($14M Value) Marvin (entrepreneur) could have tried
to raise money from another venture capital company preference to
First Meriam.   To protect themselves against this, venture capital
firms sometimes demand first refusal on new capital firms sometimes
demand first refusal on new capital issues.  Would you recommend this
arrangement? Why?

VC firms do not like having their stake diluted.

Borrow from them, and they hold you by the n*ts
- rationally they would be insane to give you a way of releasing their grip.