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. 045How much should founders own at IPO, and why does it matter to you as an early investor?Cap table and dilutionIntermediatetechnicalGrowth equityLate-stage VC

   Say this

   Somewhere in the ten to twenty percent range for the founding team collectively is typical and healthy. It matters because below roughly ten percent the founders' incentive to grind out the last five years of value creation weakens badly, and that is a risk sitting in your position, not theirs.

   Then walk it

   1. The arithmetic of a normal path: five or six rounds at 15 to 25 percent dilution each, plus pool top-ups, takes a founding team from 100 percent to the teens. Two founders splitting 15 percent at IPO is a perfectly standard outcome.
   2. Why the floor matters. A CEO with 3 percent of a company worth $2bn has $60m, which is life-changing, and the marginal incentive to spend another five years doubling it is much weaker than for someone holding 15 percent. Boards deal with this by issuing large new grants, which dilutes you again.
   3. So as an early investor I care about founder ownership for a purely selfish reason: it determines whether the person driving my biggest position is still motivated in year eight, and whether the company will have to spend equity to re-motivate them.
   4. This is one of the strongest arguments for capital efficiency. Every unnecessary round costs the founders 15 to 20 percent of what they hold, and the cheapest way to protect founder ownership is to need less money.
   5. It also shapes how I think about secondaries. Letting a founder sell 5 to 10 percent of their holding in a later round takes personal financial pressure off and often makes them bolder rather than lazier. I would generally support a modest, capped founder secondary rather than watch them make risk-averse decisions.
   6. The honest caveat: there is no magic threshold and plenty of enormous companies IPO'd with founders in single digits, sometimes with dual-class shares that preserve control while the economics diluted. Control and economics are separable, and dual-class structures are how that gets handled in practice.

   Where candidates lose it

   Treating this as a founder-welfare question. The interviewer wants to hear that founder ownership is a risk factor in your own position. And if you cannot connect it to capital efficiency and to dual-class control structures, the answer stays superficial.

   Expect next

   • How would you feel about a founder selling secondary at Series C?
   • What does dual-class stock do here?
   • How many rounds is too many?
2. 046If a company raises one hundred dollars of debt and buys back one hundred dollars of shares, what happens to enterprise value and equity value?Cap table and dilutionIntermediatetechnicalSilver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Enterprise value is unchanged and equity value falls by one hundred. Nothing happened to the operating business, so enterprise value cannot move. Debt went up by 100, cash is unchanged because it went straight out to shareholders, so net debt is up 100 and the equity is down 100.

   Then walk it

   1. Enterprise value equals equity value plus net debt. It is a measure of the operating asset, and neither raising debt nor buying stock changes the cash flows that asset produces.
   2. Trace the cash. Raise $100 of debt: cash up 100, debt up 100, net debt unchanged, enterprise value unchanged, equity value unchanged. Then spend the $100 buying shares: cash down 100, so net debt is now up 100.
   3. Since enterprise value is fixed, equity value must fall by 100. And that is right — you handed $100 to the shareholders who sold, so the remaining equity is worth $100 less in aggregate.
   4. Now the part that catches people: share price should not change in a frictionless world. The aggregate equity fell 100 and the share count fell by 100 divided by the price, so value per remaining share is the same. The shareholder is not richer; the composition of their claim changed.
   5. Then the real-world second-order effects worth naming. The tax shield on the new debt has genuine value, which nudges enterprise value up. Higher leverage raises the cost of equity and the risk of distress, which nudges it down. Net effect is small at low leverage and negative at high leverage.
   6. And EPS goes up, which is why companies do it, and why buybacks get announced as if value was created. Fewer shares and only a partial earnings hit from after-tax interest. Accretive to EPS, roughly neutral to value. That distinction is the entire point of the question.

   Where candidates lose it

   Saying enterprise value falls because debt rose. Debt is in the bridge from enterprise value to equity value, not in enterprise value itself. The second trap is saying the share price rises because there are fewer shares — the aggregate equity fell by the same amount, so per share it is a wash before you get to the tax shield.

   Expect next

   • What happens to earnings per share?
   • Does the share price change? Why not?
   • At what leverage level would enterprise value actually fall?

   Reported by candidates at Silver Lake (Technology, Media and Telecom, San Francisco, 2022). Source: Wall Street Oasis.

3. 048What goes into a fully diluted share count, and why do you insist on it?Cap table and dilutionIntermediatetechnicalGrowth equity

   Say this

   Common shares, all preferred on an as-converted basis, all issued options whether vested or not, the entire unissued option pool, warrants, and any SAFEs or notes converted at their caps. Everything that will one day be a share. You insist on it because every other denominator understates your dilution.

   Then walk it

   1. Common: founders and anyone who has exercised. Preferred: converted one-for-one unless there has been an anti-dilution adjustment, in which case at the adjusted ratio.
   2. Options: all granted options, vested or not, plus the unissued pool. Including the unissued pool is what makes it fully diluted rather than merely as-converted, and it is the line founders most often leave out.
   3. Convertible instruments: SAFEs and notes converted at whichever of their cap or discount gives more shares, plus accrued interest on notes. If the company has $4m of outstanding SAFEs, they are shares and pretending otherwise misstates your position by several points.
   4. Warrants, including anything issued to a venture debt lender. Venture debt typically carries warrant coverage of 10 to 25 percent of the loan amount, and it is easy to miss in a data room.
   5. Why it matters practically: your ownership, the preference stack, and every per-share number in the waterfall depend on the denominator. A term sheet that says 20 percent on a basic share count and 16 percent fully diluted is a materially different deal, and the document will always say fully diluted.
   6. So in diligence I would rebuild the cap table myself from the underlying documents rather than accept the founder's spreadsheet. It is the single most common place where numbers are wrong, usually honestly — a founder who has raised on four SAFEs and two notes often genuinely does not know their own fully diluted number.

   Where candidates lose it

   Forgetting the unissued option pool, or forgetting warrants attached to venture debt. Both are real shares. And accepting the company's cap table at face value — rebuilding it is table stakes for an associate, and saying you would do it is part of the answer.

   Expect next

   • How do you handle warrants from a venture debt facility?
   • What is the difference between as-converted and fully diluted?
   • Where do founders' cap tables usually go wrong?

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.