Venture capital companies and entrepreneurs need to work together effectively for successful investments. By incentivizing entrepreneurs to put in persistent effort over short-term gains, both parties can benefit. Research shows that when venture capital firms encourage entrepreneurs to focus on long-term success and share the costs of persistent efforts, both sides invest more in the project. This leads to higher profits for the venture capital firms and a greater stake in the company for the entrepreneurs. By emphasizing future earnings and offering the right incentives, both parties can increase their investment amounts and overall success.