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. 059Would you rather own twenty percent of a five hundred million dollar outcome or five percent of a five billion dollar outcome?Portfolio constructionIntermediatetechnicalEarly-stage VCSeed funds

   Say this

   The second: $250m against $100m. But the real answer is that it depends on cheque size and the probability of each, because the two positions are not bought for the same price and not with the same likelihood.

   Then walk it

   1. The arithmetic first, fast: 20 percent of $500m is $100m. 5 percent of $5bn is $250m. The billion-dollar outcome wins by 2.5 times even with a quarter of the ownership.
   2. That is the core lesson of venture and why ownership discipline can be overrated: outcome size dominates ownership. A partner who insists on 20 percent and therefore passes on the companies that will not sell 20 percent is optimising the wrong variable.
   3. But then the cost side, which is what makes it a real question. To hold 20 percent of a $500m company you probably invested $3m at seed and defended it. To hold 5 percent of a $5bn company you may have put in $2m at seed and been diluted, or $50m at Series D. The multiple on invested capital could favour either.
   4. And probability, which is the part candidates skip: the $500m outcome is perhaps ten times more likely than the $5bn one. On expected value the two can be close, and for a small fund the $500m outcome may be perfectly sufficient while for a $2bn fund it is noise.
   5. Which is the real point: the answer is determined by fund size. A $50m fund is made whole by the $500m exit. A $1bn fund needs the $5bn one, which is why large funds structurally cannot invest in companies with $500m ceilings, regardless of how good those companies are.
   6. So my answer: the $5bn outcome, and I would say the interesting version of the question is not which I prefer but what fund size makes each one the right target.

   Where candidates lose it

   Doing the arithmetic and stopping. It takes five seconds and is not what is being tested. The content is in tying it to fund size and to the probability of each outcome — that is what turns a mental-maths question into a portfolio-construction answer.

   Expect next

   • How does fund size change your answer?
   • What ownership do you actually target at seed, and why?
   • If the $5bn outcome is ten times less likely, which do you pick?
2. 064What should the board look like at Series A, and what changes by Series C?Board and governanceIntermediatetechnicalGrowth equity

   Say this

   At Series A, five seats: two founders, the Series A lead, the seed investor or a second common seat, and one genuinely independent director. By Series C it grows to seven with more investor and independent seats, and the founders no longer control it — which is the real change.

   Then walk it

   1. The standard Series A structure is two common, one preferred, and two independents agreed by both sides, or the simpler three-two split with founders holding the majority. Either way the founders still effectively control the board at the A, and that is normal and healthy.
   2. The independent seat is the one most people undervalue. It is the tie-breaker, and if you pick someone with genuine operating experience at the next stage of scale, they contribute more than any investor director does. The mistake is leaving it empty for two years, which happens constantly.
   3. By Series B and C, each new lead wants a seat and the board drifts to seven or nine. At some point the investor plus independent seats outnumber the founders, and control has shifted. Founders often do not register the moment it happens because it arrives one seat at a time.
   4. So the counter-discipline: cap the board at seven, move later investors to observer status rather than full seats, and add independents rather than investors as the company scales. A nine-person venture board does not make better decisions, it makes slower ones and pushes the real conversations into side calls.
   5. What also changes by Series C is the work. An A board is about product-market fit, hiring and the next raise. A C board is about operating discipline, the finance function, audit and compensation committees, and starting to think about what a public company or an acquisition needs.
   6. And a governance detail worth knowing: founders preserve control through mechanisms other than board seats — super-voting shares, or a voting agreement that ties specific seats to whoever holds the founder shares. Board composition and voting control are separate levers and sophisticated founders manage both.

   Where candidates lose it

   Describing a board as just a headcount. The substance is who controls it, when control shifts, and that independents are more valuable than extra investor seats. Also failing to distinguish board control from voting control — they are separate and founders often keep one while losing the other.

   Expect next

   • At what point do the founders lose board control, and does it matter?
   • How would you choose an independent director?
   • Would you take an observer seat instead of a board seat?
3. 069Would you sell a position in the secondary market, and how is secondary priced?Down rounds and secondariesIntermediatetechnicalSecondariesGrowth equity

   Say this

   Yes, in three situations: the position has grown so large it dominates the fund, the fund is at the end of its life and needs to return capital, or my view has changed but the company is still marked up. Pricing is typically a discount to the last round, with the discount reflecting information asymmetry and the buyer's lack of rights.

   Then walk it

   1. Pricing mechanics: secondary trades reference the last primary round price, then discount it. Direct secondaries in strong companies can trade near or above the last round; ordinary positions in reasonable companies trade at 20 to 40 percent discounts; and in a weak market or a company that has not raised for two years, discounts of 50 to 70 percent are normal.
   2. What drives the discount: how stale the last round is, whether the buyer gets information rights or is buying blind, whether the shares are common or preferred, and transfer restrictions — most private companies have rights of first refusal and board consent on transfers, which alone knocks off value.
   3. Why a fund sells. First, concentration: a position at 40 percent of fund NAV is a risk-management problem regardless of conviction. Second, fund life — a ten-year fund in year eleven has LPs who want cash, and DPI is the number they judge you on. Third, a changed view while the mark is still good.
   4. The other side of it, which is the more interesting answer in an interview: buying secondary. Late-stage secondary is where a lot of the best risk-adjusted venture returns have sat since 2022, because you can buy a company with real revenue at a large discount to a price that was set in a completely different market. The diligence problem is that you may get no access to the company.
   5. Then the structures: direct secondary from an early investor or employee, an LP-interest sale of a whole fund stake, a continuation vehicle where the GP moves assets into a new fund with new capital, or a strip sale of several positions. Each has different pricing and different conflicts.
   6. And the conflict I would name: a GP selling to a continuation fund they also manage is on both sides of the trade. That requires an independent valuation and an LP advisory committee sign-off, and it is the governance issue LPs currently care most about.

   Where candidates lose it

   Treating secondary as a distressed-only market. Since 2022 it has been a core part of how venture liquidity works, and employee tender offers and continuation vehicles are routine. Also quoting a discount without naming what drives it — staleness, rights, and transfer restrictions are the three levers.

   Expect next

   • How would you diligence a secondary position with no access to the company?
   • What is a continuation vehicle and what is the conflict?
   • Would you buy or sell in today's market?
4. 070M&A or IPO — which exit do you push for?Exits and liquidityIntermediatetechnicalGrowth equity

   Say this

   Whichever produces more risk-adjusted cash for the fund, and for the overwhelming majority of venture-backed companies that is M&A, because the bar for a good IPO is much higher than people assume. IPO is right for a small number of companies with genuine scale, predictability and a reason to be public.

   Then walk it

   1. The numbers frame it: the large majority of venture exits are trade sales, and only a small fraction of venture-backed companies ever list. Pushing for an IPO on a company that is not ready is how a $600m acquisition offer gets turned down and becomes a $200m sale two years later.
   2. What an IPO actually needs today: roughly $200m-plus of revenue, predictable growth in the 25 to 30 percent range, a path to profitability on a defined timeline, clean accounting, a public-company finance function, and a CEO who wants the job. Any one of those missing and the listing is a bad idea even if a bank says otherwise.
   3. M&A advantages: certainty, speed, cash at close, no lockup, and often a strategic premium a public market will not pay because the acquirer values synergy. For the fund, cash at close is DPI, and DPI is what LPs judge you on.
   4. IPO advantages: no ceiling on the outcome, so the genuinely great companies are worth far more public than any acquirer would pay. Plus the ability to keep compounding — a fund holding a position post-IPO through a lockup has sometimes made more in the two years after listing than in the eight before it.
   5. The practical conflict I would name: the fund may want liquidity before the founder does, or the reverse. A partial secondary at the last round, or selling into a strategic round, resolves more of these tensions than people expect and is worth raising before the exit conversation becomes adversarial.
   6. And the India-specific version, because it is now genuinely different: the domestic listing market has become a real exit route rather than a theoretical one, with a run of consumer internet and fintech listings absorbing large amounts of venture stock. For an India-focused fund the IPO path is more available than it was five years ago, and that has changed how those funds model exits.

   Where candidates lose it

   Defaulting to IPO as the prestige outcome. Interviewers are testing commercial judgement, and the judgement is that M&A is the base case for almost everything. Give the concrete readiness bar for an IPO — revenue scale, predictability, profitability path — because a candidate who cannot name it is guessing.

   Expect next

   • What revenue scale does a company need to list today?
   • How do you handle a lockup as a fund?
   • Has the Indian listing market changed the calculus for India-focused funds?
5. 071What makes a startup acquirable?Exits and liquidityIntermediatetechnicalGrowth equityIndian venture capital

   Say this

   That a specific, identifiable acquirer would be meaningfully better off owning it than competing with it — and that buying it is cheaper than building it. Acquirability is about being a solution to somebody's strategic problem, not about being a good business in the abstract.

   Then walk it

   1. Start with the buyer list. At the time of investment I want to be able to name five to eight plausible acquirers and say what problem each one has that this company solves. If I cannot name three, the exit path is a hope.
   2. The three things acquirers actually buy: a product that plugs a gap in their roadmap, a customer base or distribution they cannot reach, or a team they cannot hire. Revenue is what sets the price, but one of those three is usually what triggers the conversation.
   3. The build-versus-buy test is the real filter. If a strategic can replicate the product in eighteen months with an existing team, they will, and they will offer you a price that reflects that. What makes buying cheaper is time, a locked-in customer base, data that cannot be reconstructed, or a regulatory licence.
   4. Practical acquirability factors that get overlooked: a clean cap table, a manageable preference stack, technology that integrates rather than requiring a rewrite, contracts that are assignable on a change of control, and no litigation. Deals die in diligence on these far more often than on price.
   5. Then the deliberate part: build relationships with acquirers years before you need them. The best outcomes come from a corporate development team that has known the company for three years, not from a banker's process. Encouraging a portfolio CEO to take those meetings early is a genuine board value-add.
   6. And the honest limitation: optimising for acquirability caps the outcome. A company that partners with the obvious acquirers and stays inside their roadmap will get bought at a decent price and will never be the fund returner. In a power-law portfolio that is a trade worth naming rather than assuming.

   Where candidates lose it

   Answering with generic business quality — good product, good growth. Acquirability is buyer-specific and the answer must start from the buyer's strategic problem. And do not skip the unsexy diligence factors: assignability, cap table cleanliness and the preference stack kill more acquisitions than valuation does.

   Expect next

   • Name five plausible acquirers for a company in your favourite sector.
   • How does the preference stack affect an acquisition?
   • Does optimising for acquirability limit the upside?
6. 072What happens to preferred stock at IPO?Exits and liquidityIntermediatetechnicalGrowth equityLate-stage VC

   Say this

   It all converts to common, usually automatically, and the liquidation preference and protective provisions disappear. That automatic conversion is why the terms of a qualified IPO matter so much — and why IPO ratchets exist, to protect investors who priced in at a level the listing does not support.

   Then walk it

   1. The mechanism: the charter defines a qualified public offering, typically by minimum proceeds and sometimes a minimum price, and on such an offering all preferred converts to common automatically. One class of stock, no preference, no protective provisions.
   2. So the preference stack simply evaporates. An investor with $200m of 1x preference who converts into common now owns a percentage of a public company and takes the market price like everyone else.
   3. Which is why the qualified-IPO definition is negotiated. If the threshold is set low, the company can list at a price where a late investor takes a loss and loses the preference that would have protected them in a sale. Late-stage investors fight over that threshold specifically.
   4. Hence the IPO ratchet: a provision giving the investor extra shares if the IPO prices below their entry price, so their dollar value is preserved at the expense of everyone else. Several 2021-vintage crossover rounds carried them, and they fired.
   5. Then the mechanics around listing: a lockup, normally 180 days, sometimes with early-release tranches tied to price performance. The fund cannot sell at the listing, so the return is determined by the price six months later, not the offer price.
   6. And how the fund actually distributes: either sell in the market after the lockup and distribute cash, or distribute the shares in kind to LPs, who then decide themselves. In-kind distributions are common and they matter for reporting, because DPI on an in-kind distribution is struck at the distribution-date price rather than what LPs eventually realise.

   Where candidates lose it

   Saying the preference survives into the public company. It does not — conversion is automatic. And missing the qualified-IPO threshold and the lockup, which are the two things that actually determine what the fund gets. The follow-up is almost always about the ratchet, so get there first.

   Expect next

   • What is a qualified public offering and who negotiates the threshold?
   • What is an IPO ratchet and who bears its cost?
   • What is an in-kind distribution and how does it affect DPI?
7. 073What is a realistic holding period, and why does it break fund models?Exits and liquidityIntermediatetechnicalSeed fundsIndian venture capital

   Say this

   Eight to twelve years from seed to exit, against a fund life of ten years plus extensions. That mismatch is structural and it is why funds run out of time before their best companies are ready, which forces extensions, continuation vehicles and secondary sales.

   Then walk it

   1. The arithmetic of the mismatch: a fund invests over years one to four, so a company backed in year four needs to exit by year ten to be inside the original fund life. If the median seed-to-exit path is nine years, that company was never going to make it.
   2. So funds ask LPs for one or two-year extensions as a matter of routine, and a fund in year thirteen with two positions left is normal rather than a failure.
   3. Why the period has lengthened: companies stay private far longer than they did, because private capital is available at scale and going public early is unattractive. Median time from founding to IPO roughly doubled over two decades.
   4. The consequence for IRR, which is the part an interviewer is testing: IRR is time-weighted, so a 10x over five years is a 58 percent IRR and the same 10x over twelve years is 21 percent. The multiple is identical and the LP's judgement of you is completely different. That is why GPs are tempted by early exits that flatter IRR at the cost of absolute return.
   5. And the consequence for liquidity: LPs judge on DPI, cash actually returned. A fund with a 4x TVPI and a 0.3x DPI in year nine has made no money as far as an LP's cash account is concerned, which is exactly the situation a large part of the 2019 to 2021 vintage sits in.
   6. Which is why secondary sales and continuation vehicles stopped being exotic. Selling a decent position at a 30 percent discount in year ten to convert a mark into cash is often the right decision for the fund even when it is the wrong decision for that single company.

   Where candidates lose it

   Giving a number and stopping. The content is the mismatch with fund life, the effect on IRR versus multiple, and the DPI problem. And know the direction: longer holds crush IRR while leaving the multiple untouched, which is the tension behind most exit-timing arguments inside a partnership.

   Expect next

   • How does a longer hold affect IRR versus multiple?
   • What is a continuation vehicle and why has it become common?
   • Would you take a 3x in year four or a 6x in year ten?
8. 075DPI, TVPI and IRR — which do LPs actually care about?Fund economicsIntermediatetechnicalGrowth equity

   Say this

   DPI, in the end. TVPI and IRR are opinions about unrealised value; DPI is cash in the LP's account. In the last three years DPI has become the only number that matters in a re-up conversation, because the industry is sitting on a large stock of marks that have not converted into cash.

   Then walk it

   1. Definitions cleanly: DPI is distributions divided by paid-in capital — realised cash. RVPI is residual value over paid-in — the marks. TVPI is the sum of the two, total value over paid-in. IRR is the time-weighted annualised return on the cash flows.
   2. Why DPI wins: it cannot be marked. A 3.5x TVPI in year nine with a 0.4x DPI means the GP thinks the portfolio is worth a lot and the LP has seen almost none of it. LPs have been burned by exactly that in the 2019 to 2021 vintages.
   3. Why TVPI still matters: for a young fund there is nothing else. In years one to five, TVPI and the quality of the marks are the only information, which is why LPs scrutinise the valuation policy and whether marks are supported by third-party rounds.
   4. Why IRR is the most manipulable: it is sensitive to timing, so early small exits inflate it, and a credit facility that defers capital calls raises reported IRR without changing a single underlying outcome. A GP quoting only IRR is usually quoting their best-looking number.
   5. How they are read together: TVPI tells you the size of the prize, DPI tells you how much has actually arrived, and IRR tells you how fast. A good fund is something like 3x TVPI with 1.5x DPI by year eight. Top-quartile venture historically needs roughly 2.5 to 3x net TVPI, and the DPI expectation for that fund in year ten is above 1.5x.
   6. And the one the LPs quietly use to cut through all of it: public market equivalent, comparing the fund's cash flows to what the same money in an index would have done. Venture has to beat the index by a meaningful margin to justify a decade of illiquidity, and a lot of funds do not.

   Where candidates lose it

   Reciting the definitions and not ranking them. Every LP conversation since 2023 has been about DPI, and a candidate who does not know that has not been paying attention. Also name the manipulation: credit facilities inflating IRR, and marks supporting TVPI, are the two things sophisticated LPs adjust for.

   Expect next

   • What TVPI and DPI would you expect from a top-quartile fund at year eight?
   • How can a GP flatter their IRR without creating value?
   • What is a public market equivalent and why do LPs use it?
9. 076Walk me through how carry actually works on a two-and-twenty fund.Fund economicsIntermediatetechnicalGrowth equityVC fund operations

   Say this

   Two percent of committed capital a year pays the firm's costs, and twenty percent of the profits is the GP's share of the upside. On a $100m fund, the GP earns roughly $18m of fees over the life and then 20 percent of everything above the capital returned — so a 3x fund generates about $40m of carry.

   Then walk it

   1. Fees: 2 percent of $100m is $2m a year, usually stepping down after the investment period, so over ten years it totals $15m to $18m rather than $20m. Critically, that money reduces what can be invested — you deploy $82m to $85m, not $100m.
   2. Carry: 20 percent of profits after the LPs get their capital back. A $100m fund returning $300m has $200m of profit, so $40m of carry to the GP and $260m to the LPs. That $40m is the reason anybody does this job.
   3. The waterfall order in a typical venture fund: return all capital first, then split profits 80/20. Most venture funds use a whole-fund or European waterfall, so no carry is paid until the entire fund's capital is returned. A deal-by-deal American waterfall pays earlier and requires a clawback.
   4. Preferred return, or hurdle: common in buyout at 8 percent, much less common in venture. Venture LPs generally accept no hurdle because the return profile is lumpy and long, and a hurdle on a J-curve asset behaves oddly.
   5. The two things that change the picture in practice. One, the GP commit — usually 1 to 3 percent of the fund from the partners' own money, which is the alignment LPs look at first. Two, carry is split internally, and how it is split between senior and junior partners is the real economics of a career in the industry.
   6. And the honest arithmetic on why fund size matters more than performance for a GP's income: 2 percent of a $1bn fund is $20m a year of fee income regardless of results. That is the structural conflict in the industry, it is why funds grow, and an LP's main defence is the GP commit and a fee step-down.

   Where candidates lose it

   Saying 20 percent of returns instead of 20 percent of profits. The capital comes back first. And forgetting that fees reduce investable capital — a $100m fund invests about $83m, which changes every portfolio-construction number. If you can name the whole-fund versus deal-by-deal waterfall distinction, you are well ahead.

   Expect next

   • What is a clawback and when does it apply?
   • Why do venture funds usually have no preferred return?
   • What does fund size do to the GP's incentives?
10. 078Who are the LPs in a venture fund, and what does each type actually want?Fund economicsIntermediatetechnicalVC fund operationsIndian venture capital

    Say this

    University endowments, foundations, pension funds, sovereign wealth funds, insurers, funds of funds, family offices and high-net-worth individuals. They all want returns, but they differ enormously in liquidity tolerance, ticket size and patience, and that determines the kind of fund each will back.

    Then walk it

    1. Endowments and foundations are the classic venture LP: long horizon, high tolerance for illiquidity, and the ones most willing to back a first-time manager. They also care intensely about access to the top firms, which is why they defend existing relationships.
    2. Pensions and insurers write the biggest cheques but have regulatory constraints, need to write $50m-plus to make the diligence worthwhile, and therefore cannot back a $75m seed fund at all. That constraint alone explains a lot of why funds grow.
    3. Sovereign wealth funds have become dominant at the large end and increasingly co-invest directly, which makes them both an LP and a competitor. Funds of funds provide access for smaller institutions and add a layer of fees.
    4. Family offices and individuals are the flexible money — faster decisions, smaller cheques, more tolerant of an unusual strategy — and they are where most first-time managers actually raise. The trade-off is that they are less reliable across cycles and can default on a capital call.
    5. What they all want beyond return: DPI, because cash is what funds their spending commitments. An endowment with a 5 percent annual payout obligation cannot live on marks. This is why the DPI conversation has dominated fundraising since 2023.
    6. The India-specific structure is worth knowing: domestic funds are typically set up as SEBI-registered Category I or II Alternative Investment Funds, with a large share of capital from Indian family offices, corporates and increasingly domestic institutions, alongside offshore feeders. The rise of domestic LP capital is one of the genuine structural changes in Indian venture over the last five years, because it reduces the dependence on a single global risk cycle.

    Where candidates lose it

    Listing LP types without saying what each one wants or what constrains them. The insight is that cheque-size minimums and liquidity needs determine which funds they can back, which in turn drives fund sizes upward. And for an India-focused firm, knowing the AIF structure and the growth of domestic LP capital is the difference between reading about the market and following it.

    Expect next

    • Why can't a large pension fund back a $75m seed fund?
    • What is an AIF and which category would a venture fund use?
    • How would a first-time manager raise a fund today?

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.