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. 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?
2. 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?
3. 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.