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. 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?
2. 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?
3. 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?
4. 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?
5. 074Explain the J-curve.Fund economicsCorephone / first roundGrowth equity

   Say this

   A fund's reported return is negative for the first few years, then turns up sharply. Fees and expenses are charged from day one while investments are held at cost, so the net return starts below zero and only recovers once the winners get marked up or exit.

   Then walk it

   1. Why the dip: management fees of around 2 percent a year come out of committed capital immediately. Meanwhile companies are held at cost until a new round reprices them, so there are costs and no gains. By year two or three a fund is commonly showing a net TVPI of 0.8 to 0.9.
   2. Why it turns: as portfolio companies raise at higher valuations, the fund marks them up, and TVPI climbs. Then exits convert marks into cash and DPI starts rising, usually several years behind TVPI.
   3. Typical shape for venture: trough around year two or three, crossing 1x somewhere between years four and six, and peak distributions in years seven to twelve. Venture's J-curve is deeper and longer than buyout's because there is no cash yield along the way.
   4. The practical consequence for an LP: early-year IRR is meaningless and comparing a year-three fund to a year-eight fund is nonsense. LPs use vintage-year benchmarking specifically because of this.
   5. The consequence for the GP, and this is the part worth volunteering: the J-curve is why raising the next fund is hard. You go back to market in year three or four with a portfolio that shows a negative net return, and the pitch has to be built on the underlying companies rather than the headline number.
   6. One honest caveat: the shape can be manufactured. Marking up a company aggressively on a small insider round, or using a NAV facility, flattens the curve without creating value. Which is why an LP looks at DPI rather than the shape of the line.

   Where candidates lose it

   Describing the shape without explaining the two mechanisms — fees charged upfront, holdings carried at cost. And missing the fundraising consequence, which is the reason a GP cares about the J-curve at all. If you can add that marks can be managed, you are ahead of most candidates.

   Expect next

   • How deep does the trough usually get?
   • How does a GP raise Fund II while sitting in the trough?
   • What is a NAV facility and how does it affect the curve?
6. 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?
7. 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?
8. 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?
9. 087Walk me through the regulatory backdrop for a foreign fund investing into an Indian startup.India venture marketHardtechnicalIndian venture capital

   Say this

   The core constraints are FEMA and the FDI policy: sectoral caps and whether the sector is automatic route or needs approval, pricing rules that set a floor on what a non-resident can pay and a ceiling on exit price, the Press Note 3 approval requirement for investors from land-bordering countries, and instrument restrictions that rule out a standard SAFE.

   Then walk it

   1. Route and caps first. Most technology sectors are 100 percent FDI under the automatic route, so no prior approval. But some are capped or conditional — insurance, defence, multi-brand retail, certain digital media — and inventory-led e-commerce is restricted while the marketplace model is not, which is the single structural fact that shaped Indian e-commerce.
   2. Pricing: a non-resident must buy at or above fair market value determined by a registered valuer, and on exit cannot sell above fair value to a resident. This is why you cannot simply paper a US-style round — the valuation has to be supported, and it constrains the mechanics of a down round or a discounted secondary.
   3. Instruments: equity, compulsorily convertible preference shares and compulsorily convertible debentures are permitted as FDI. Optionally convertible instruments are treated as debt and fall under the external commercial borrowing rules, which is restrictive. So the Indian equivalent of a SAFE or a convertible note is normally a CCPS or CCD with a conversion formula.
   4. Press Note 3: any investment from an entity in a country sharing a land border with India, or with beneficial ownership there, needs government approval. It has been in force since 2020 and has materially reduced Chinese capital in Indian startups, so fund structures and ultimate beneficial ownership are a real diligence item.
   5. Then the domestic side. A domestic fund is typically a SEBI-registered Category I or II Alternative Investment Fund with its own contribution and reporting rules. Many funds use a GIFT City vehicle, or historically Mauritius or Singapore, and the tax treaty position after the treaty amendments drives that choice.
   6. Plus the reporting and startup-specific layer: FC-GPR filings after each issuance, and DPIIT startup recognition, which gives tax and compliance benefits and an exemption from the angel tax provisions that used to catch valuations on domestic investment. The angel tax on non-resident investment was withdrawn in the 2024 budget, which removed one of the most disliked frictions in the market.

   Where candidates lose it

   Answering with generalities about 'Indian regulation being complex'. An Indian VC interviewer expects specific names: FEMA, the automatic route, fair market value pricing, CCPS and CCD, Press Note 3, FC-GPR, AIF categories, DPIIT recognition. The vocabulary is the test. And do not claim SAFEs work in India — they do not, and that single error reveals the answer is imported from a US playbook.

   Expect next

   • Why does a founder flip the holding company to Delaware?
   • What is DPIIT recognition worth to a startup?
   • What happened to the angel tax?
10. 088Why do Indian startups flip their domicile abroad, and why have some flipped back?India venture marketIntermediatetechnicalIndian venture capital

    Say this

    They flip out for investor familiarity, standard instruments like SAFEs, easier global M&A and cleaner ESOP treatment. They flip back because the Indian listing market became a genuinely attractive exit, and a company selling to Indian customers with Indian revenue lists better at home than abroad.

    Then walk it

    1. Why flip out, historically: US investors prefer Delaware documents, SAFEs and convertible notes work there and not in India, employee option schemes are simpler for a global team, and a US parent is easier for an American acquirer to buy. For a company selling to US customers, the US parent is the natural structure.
    2. Why flip back, which is the newer and more interesting half: the Indian public market has become a real exit route with deep domestic institutional demand, and a company with Indian revenue and Indian users gets a better reception and often a better multiple on a domestic listing. Several well-known companies have reverse-flipped specifically to list in India.
    3. The other pull factors: a maturing domestic LP and institutional base, regulatory improvements including the removal of the angel tax on non-resident investment, and for regulated sectors like lending and payments, the reality that an Indian licence sits more comfortably under an Indian parent.
    4. The cost is what makes this a real question rather than a preference: reverse-flipping through a scheme of arrangement triggers a significant tax charge, requires NCLT approval, and historically took twelve to eighteen months. Companies have paid very large sums to do it, which tells you how valuable the domestic listing is judged to be.
    5. There has been a policy push to simplify inbound mergers and shorten the approval path, precisely because the government wants these companies domiciled and listed in India. Whether the friction actually reduces is a live question and worth having a view on.
    6. How I would use this as an investor: at the time of a seed investment, ask where the customers will be in five years, because that determines the right domicile, and getting it right at incorporation costs nothing while fixing it later costs a fortune. That is a genuinely useful piece of board advice and it is the practical point of the question.

    Where candidates lose it

    Knowing only the flip-out half. The reverse-flip wave is the current story and an Indian interviewer will expect it, including that it is expensive and tax-triggering rather than a simple re-registration. And be able to state the deciding question — where are the customers — rather than treating domicile as a matter of investor preference.

    Expect next

    • What determines the right domicile at incorporation?
    • What does a reverse flip actually cost?
    • Which companies would you advise to stay in Delaware?

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.