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. 042Build me a cap table from founding through Series B.Cap table and dilutionHardtechnicalEarly-stage VCGrowth equity

   Say this

   Work in percentages, round by round, and apply each round's dilution to everyone who came before. Two founders start at 100, a seed round takes 20, a Series A takes 22, a Series B takes 18, and the founders end up around 45 percent before you account for the option pool, or closer to 38 after it.

   Then walk it

   1. Founding: two founders, 50/50, 10 million shares, all common, four-year vesting with a one-year cliff.
   2. Seed: $3m at a $12m post-money, so 25 percent to the seed investor, plus a 10 percent pool established out of the pre-money. Founders go from 100 to about 65 percent between the two. The pool coming from the pre-money is why 100 minus 25 does not equal the founders' number.
   3. Series A: $12m at a $60m post-money, so 20 percent to the new investor, and a pool top-up to 12 percent. Everyone pre-existing is diluted by roughly 22 percent including the top-up, so the founders go from 65 to about 51.
   4. Series B: $30m at $170m post-money, 17.6 percent to the new lead, plus a small pool top-up. Founders land around 41 to 42 percent, and if the seed fund did not follow on it is down from 25 to about 16.
   5. The rule to say out loud, because it is the whole mechanic: each round's dilution applies multiplicatively to every prior holder. Three rounds at 20 percent each leaves you with 0.8 cubed, which is 51 percent, not 40. Candidates subtract when they should multiply.
   6. Then the two real-world complications I would flag. One, the pool top-up at each round comes out of the pre-money, so the founders fund the hires the new investor wants. Two, if there are SAFEs or notes outstanding, they convert first and they convert at their caps, so the Series A investor's own percentage is diluted by paper they did not price.

   Where candidates lose it

   Subtracting percentages instead of multiplying. Three 20 percent rounds do not take you to 40 percent. And forgetting the option pool at each round — it is typically 10 to 15 percent, it comes from the pre-money, and leaving it out makes the founders look 10 points richer than they are.

   Expect next

   • Where did the option pool come from in each round?
   • How much should the founders own at Series B for this to be fundable?
   • What happens to the seed investor if they do not follow on?
2. 043What is the option pool shuffle, and who actually pays for it?Cap table and dilutionHardtechnicalEarly-stage VCSeed funds

   Say this

   The pool shuffle is putting the new option pool into the pre-money valuation, so the founders are diluted by it and the incoming investor is not. The founders pay for every hire the new investor says the company needs, and it lowers the effective price the investor pays without touching the headline number.

   Then walk it

   1. Mechanically: the term sheet says a $20m pre-money and a 15 percent post-closing option pool. The pool is created before the money goes in, so the pre-money share count expands, and the effective pre-money for the existing holders is lower than $20m.
   2. Run the number, because that is the answer. $20m pre, $5m in, so a $25m post and 20 percent to the investor. Now carve a 15 percent pool out of the pre-money: the founders' share of the pre-money company drops from 100 to 81 percent of what it was. The effective pre-money on the founders' existing equity is closer to $16.25m than $20m. That is an 19 percent price cut disguised as a governance term.
   3. Who pays: existing holders only — founders, seed investors, anyone on the cap table before the round. The new investor's 20 percent is measured after the pool exists, so they are untouched by it.
   4. Why investors do it: it is a real economic term that never appears in the headline, so a founder optimising for a press-release valuation gives it away without noticing. Two term sheets at $20m pre with a 10 percent and an 18 percent pool are materially different prices.
   5. How founders should push back, and this is the answer that shows you know the market: build a hiring plan. Argue for the pool the next eighteen months of hiring actually requires, not a round number. If you can show that 9 percent covers the plan, a 15 percent ask is the investor taking price. Alternatively ask for the pool to be split, part pre-money and part post-money.
   6. The nuance worth adding: the pool is not waste. Unissued options revert and the pool refreshes at each round. But the dilution is taken upfront by the founders and returned to nobody, which is why the sizing argument is worth having.

   Where candidates lose it

   Describing the pool and never saying it comes out of the pre-money. That single fact is the whole question. And not being able to quantify it — the interviewer will ask what a 15 percent pool does to the effective pre-money, so have the arithmetic ready.

   Expect next

   • What pool size would you argue for at Series A and why?
   • How would a founder negotiate against this?
   • What happens to unissued options at the next round?
3. 047Why would a distressed company have a high equity value?Cap table and dilutionHardtechnicalSilver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Because equity in a levered company is a call option on the enterprise value, and an option has value even when it is deep out of the money. If there is any chance the business recovers enough to clear the debt, the equity is worth something, and the more volatile the outcome the more that option is worth.

   Then walk it

   1. Set it up as the option: equity value equals the enterprise value less the debt, floored at zero. That is exactly the payoff of a call struck at the face value of the debt. Limited liability is what creates the floor.
   2. So even if enterprise value today is $800m against $1bn of debt, the equity is not worth zero. It is worth the option premium — the probability-weighted value of the scenarios where the business recovers above $1bn before the debt matures.
   3. And the counterintuitive consequence: volatility increases the equity value. A distressed company with a wildly uncertain outcome has more valuable equity than an equally distressed company with a certain modest decline, because only the upside tail accrues to the equity while the downside is the creditors' problem.
   4. Which explains the behaviour you see in distressed situations: management and equity holders favour risky strategies, because they capture the upside and creditors eat the downside. That is the classic risk-shifting conflict, and it is why credit agreements have covenants.
   5. Time to maturity also matters, same as an option. Debt maturing in five years gives the equity far more optionality than debt maturing in six months, which is why the maturity wall, not the leverage ratio, is usually what actually triggers a restructuring.
   6. The other mundane reasons a screen might show a high equity value on a distressed company: a large cash balance that has not been marked against the operating decline, an unconsolidated stake or real estate worth more than the operating business, or a retail-driven share price detached from the fundamentals. Worth naming, but the option answer is the one they want.

   Where candidates lose it

   Answering only with the mundane explanations — hidden assets, cash on the balance sheet. Those are real but this question is testing whether you see equity as a call option on enterprise value. Get to the option framing first, then add that volatility raises the equity value, which is the part that separates a good answer from a complete one.

   Expect next

   • What happens to that option as the debt maturity gets closer?
   • Why do equity holders in a distressed company favour risky strategies?
   • How would you value the debt in that situation?

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

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.