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. 056Explain the power law and what it actually means for how you vote in a partners' meeting.Portfolio constructionIntermediatetechnicalEarly-stage VCSeed funds

   Say this

   Venture returns are not normally distributed — a small number of investments produce most of the return, and roughly half return less than the capital invested. It means the only question that matters in a partners' meeting is whether this company could return the fund, not whether it is likely to lose money.

   Then walk it

   1. The shape: across a typical early-stage portfolio, something like 50 to 60 percent of investments return less than 1x, a middle band returns 1 to 3x, and one or two return 10x or more and produce the majority of the fund's gains.
   2. So the asymmetry is total. The downside of any single investment is capped at 1x of a small cheque; the upside is unbounded. That means the cost of a false negative — passing on the outlier — is enormously higher than the cost of a false positive.
   3. Which changes the question you ask. Not 'what is the probability this works' but 'if it works, is it big enough to return the fund?' A company with a 60 percent chance of becoming a $200m business is a worse portfolio decision than one with a 10 percent chance of becoming a $10bn business.
   4. This is why consensus voting is dangerous in venture. The companies that produce outlier returns are usually the ones that divide the partnership, because by definition consensus ideas are priced. A firm where every investment is unanimous is probably screening out its best decisions.
   5. It also dictates reserves. If one company will produce most of the return, the right behaviour is to concentrate follow-on capital into the names that are working and stop funding the middle. The hardest discipline in the job is refusing to feed a decent company that will never be an outlier.
   6. The limitation worth naming: the power law is a description of outcomes, not a licence for recklessness. It gets misused to justify paying any price for anything with a big story. The constraint is still that the portfolio has to be constructed so that one outlier is enough — which means enough shots, and enough ownership in each.

   Where candidates lose it

   Reciting 'one investment returns the fund' as a slogan. The interviewer wants the consequences: how it changes the question you ask in diligence, why it argues against consensus decisions, and what it implies for reserves. And you should name the misuse of it, because 'power law' has become the standard excuse for undisciplined pricing.

   Expect next

   • How many investments does a fund need for the power law to work?
   • So would you back a company the whole partnership disliked?
   • What does this mean for how you allocate reserves?
2. 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?

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.