Venture Capital interview preparation

Questions

100

Traced to a firm

31

Firms

12

Updated

September 2026

Asked at

All firmsGeneral Atlantic9Insight Partners7Silver Lake6Vista Equity Partners4Bessemer Venture Partners3ACAccel2Advent International2Battery Ventures2Andreessen Horowitz1Coatue Management1Sequoia Capital1WPWarburg Pincus1

Topic

All topicsSourcing and deal flow5Market sizing and estimation8Founders and teams5Unit economics and cohorts11Term sheets12Cap table and dilution7Early-stage valuation7Portfolio construction6Board and governance4Down rounds and secondaries4Exits and liquidity4Fund economics5Sector theses and markets6India venture market6Fit and motivation10

Level

AnyCoreIntermediateHard

Type

AnyTechnicalFitCaseMarket viewBrainteaser

1. 019Walk me through CAC, lifetime value and payback, and tell me how each one gets manipulated.Unit economics and cohortsCoretechnicalGrowth equity

   Say this

   CAC is all the money you spent to acquire a paying customer, divided by the customers you actually acquired. LTV is the gross profit that customer produces over their life, discounted. Payback is how many months of contribution margin it takes to earn the CAC back. Payback is the one I trust.

   Then walk it

   1. CAC properly done is fully loaded: paid media, sales and marketing salaries and commissions, tools, and any onboarding cost, divided by new paying customers in that period. Not just ad spend.
   2. LTV is gross-margin based, not revenue based: ARPU times gross margin, divided by monthly churn, discounted if the life is long. Using revenue instead of gross profit inflates it by whatever your cost of service is.
   3. Payback in months is CAC divided by monthly gross profit per customer. Best-in-class B2B SaaS is under 12 months, acceptable is 12 to 18, and above 24 months you are running a financing business rather than a software business.
   4. The three manipulations to look for. One, blended CAC that folds organic and word-of-mouth customers into the denominator while only counting paid spend in the numerator — always ask for paid CAC on paid customers. Two, LTV built on an early cohort's churn, which is always the best cohort. Three, a churn assumption of 1 percent monthly applied to a company that is eighteen months old and has never observed a five-year life.
   5. The practical rule I would state: LTV/CAC above 3 is the convention, but it is nearly meaningless without payback, because a 5x LTV/CAC with a 36-month payback will kill the company on cash before the ratio ever pays out.
   6. One real number to anchor it: at $12,000 CAC, $1,000 monthly revenue and 80 percent gross margin, payback is 15 months. If monthly churn is 2 percent, implied life is 50 months and LTV is $40,000, so LTV/CAC is 3.3x. Both numbers are fine; the fragile input is that 2 percent.

   Where candidates lose it

   Quoting LTV/CAC above 3 as if it settles the question, and using revenue instead of gross profit in LTV. Also: not asking over what period CAC was measured. Founders present a good quarter. Ask for twelve months and for paid-only CAC, and the ratio usually halves.

   Expect next

   • Why do you prefer payback to LTV/CAC?
   • What is a good payback period for consumer versus enterprise?
   • How would you calculate CAC for a marketplace?
2. 022Explain the rule of forty and when it stops being useful.Unit economics and cohortsCorephone / first roundGrowth equitySaaS-focused funds

   Say this

   Revenue growth rate plus profit margin should sum to at least forty. It is a trade-off rule: the market will fund growth or profit, but it wants to see that you are deliberately choosing, not accidentally failing at both. It stops being useful at small scale and when the margin definition gets fuzzy.

   Then walk it

   1. The arithmetic: 60 percent growth with a minus 20 percent margin scores 40. So does 10 percent growth with a 30 percent margin. Both pass; they are completely different companies and would be valued very differently.
   2. Which margin? Convention has settled on free cash flow margin, because EBITDA margin in software lets you hide stock compensation and capitalised software development. Ask which one the company is using — the gap is often 15 points.
   3. Why it works as a screen: it captures the real question of whether growth is being bought at a sustainable price, in one number a board can hold management to.
   4. Where it breaks. First, at small scale: a company going from $2m to $6m of revenue is growing 200 percent with a minus 150 percent margin, which scores 50 and means nothing. The rule is designed for $50m-plus businesses.
   5. Second, it treats a point of growth and a point of margin as equally valuable, and the market does not. At a given score, the market has historically paid a meaningful premium for the growth-heavy version, because growth compounds and margin does not.
   6. Third, it says nothing about durability. A company hitting 40 on a base with 85 percent net retention is on a treadmill, and a company hitting 35 with 125 percent retention is a far better asset. So I would use the rule to start the conversation and net retention to finish it.

   Where candidates lose it

   Reciting the rule without asking which margin. Companies quote EBITDA when it flatters them and free cash flow when that does. Also applying it to early-stage companies where it produces nonsense — knowing the scale at which the rule applies is half of understanding it.

   Expect next

   • Which margin definition would you insist on?
   • Would you rather have 50 percent growth at minus 10, or 20 percent growth at plus 20?
   • What does the rule miss entirely?
3. 028How do you calculate runway, and how much should a company hold?Unit economics and cohortsCorephone / first roundEarly-stage VC

   Say this

   Cash on hand divided by net monthly burn, where net burn is cash out less cash in. The working answer since 2022 has been eighteen to twenty-four months at close of a round, because that is what it takes to hit milestones and still raise from a position of choice rather than necessity.

   Then walk it

   1. Net burn, not gross burn. Gross burn is total cash out; net is after collections. A company with $1m of monthly costs and $400k of collections burns $600k, so $9m of cash is fifteen months, not nine.
   2. Use a forward burn, not a trailing one. If they are hiring against a plan, burn in month twelve will be materially higher than today. Investors who quote trailing burn always overstate runway.
   3. The eighteen-to-twenty-four-month convention exists because fundraising takes three to six months and you need to be raising on nine to twelve months of cash, not three. Below six months, the terms are set by your balance sheet rather than your business.
   4. So the real question is milestone runway, not calendar runway: is there enough cash to reach the metric that makes the next round obvious? Twenty-four months of cash that gets you to a number nobody will fund is worse than twelve that gets you to one they will.
   5. The default-alive test is the sharper version of this. At current growth in revenue and costs, does the company reach profitability before the cash runs out? If yes, it is default alive and has genuine optionality. If no, it is default dead and the next raise is not a choice.
   6. One caveat on the arithmetic: a company holding customer deposits or deferred revenue has cash it has already sold. Runway off the gross cash balance overstates it, and that is a real error in marketplace and prepay businesses.

   Where candidates lose it

   Using gross burn instead of net, or quoting cash balance divided by last month's burn when the plan doubles headcount next quarter. And giving only a calendar number — the follow-up is always 'runway to what milestone', so build that into the first answer.

   Expect next

   • What is default alive versus default dead?
   • At what point do you tell a founder to cut?
   • How much runway should they have when they start raising?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.