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. 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?
2. 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?
3. 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?
4. 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?
5. 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?
6. 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?
7. 077What return does a fund need to be considered top quartile, and what does that require of the portfolio?Fund economicsHardtechnicalSeed fundsVC fund operations

   Say this

   Roughly 2.5 to 3x net TVPI for an early-stage fund, which means about 3.5x gross before fees and carry. On a $100m fund that is $350m of gross proceeds, and given the power law it has to come from one or two companies, which sets a specific requirement on ownership and exit scale.

   Then walk it

   1. Work the gross-to-net gap first, because most candidates skip it. To return 3x net you need roughly 3.5 to 3.8x gross: fees consume 15 to 18 percent of the fund and carry takes 20 percent of the profit above capital.
   2. So $100m committed needs about $350m back gross. Apply the power law: expect half the portfolio to return under 1x, so the top two or three names have to produce $280m to $300m of it.
   3. Which fixes the requirement. One company producing $200m means either a $2bn exit with 10 percent retained, or a $1bn exit with 20 percent retained. Both are demanding, and the second is usually harder to hold through three rounds of dilution than the first is to achieve.
   4. That is why fund size is the binding constraint on strategy. A $100m fund can get there on a single $2bn outcome. A $1bn fund needs the equivalent of five of them, and there are not many $2bn-plus outcomes in a decade, which is the structural reason large venture funds underperform small ones on multiple.
   5. The other lever is DPI timing, because top quartile is measured by vintage against peers and an LP is looking at IRR too. The same 3x delivered by year eight rather than year thirteen is a completely different ranking.
   6. And the caveat about the benchmark itself: quartile data is self-reported, survivorship-biased, and the dispersion in venture is extreme — the gap between top and median in venture is far wider than in buyout. Which is why LP capital concentrates so heavily in the same handful of firms, and why a new manager's pitch is so hard.

   Where candidates lose it

   Quoting a net multiple and never bridging to gross. Fees and carry are a 20 to 25 percent haul and ignoring them makes your portfolio arithmetic wrong. And failing to connect the fund-return requirement to fund size — that connection is the whole reason the question gets asked.

   Expect next

   • So what exit do you need from your single best company?
   • Why do larger venture funds tend to return lower multiples?
   • How much should the gross-to-net gap be?
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. 079Pitch me a company that is not in our portfolio that we should invest in.Sector theses and marketsHardsuperdayInsight PartnersSoftware · New York · 2022Insight PartnersLeveraged Buyouts · New York · 2023General AtlanticGrowth Equity · New York · 2022General AtlanticGrowth Equity · New York · 2021Silver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Structure it in five beats and keep it to three minutes: the shift in the world, the company and its wedge, the evidence it is working, why it fits this firm's mandate, and what would kill it. Then stop and let them interrogate it — the pitch is the setup, the cross-examination is the actual test.

   Then walk it

   1. Beat one, the shift: what changed in the last two years that makes this possible and did not before. Regulation, a cost curve, a behaviour change, a platform. Without a 'why now', it is a feature, not a company.
   2. Beat two, the company and the wedge: what they sell, to whom, and why they win that first narrow segment. Be specific about the wedge — 'AI for healthcare' is not a wedge; 'prior-authorisation automation for mid-sized orthopaedic practices' is.
   3. Beat three, the evidence, with numbers and their source: revenue or run rate, growth, retention if you can find it, headcount trend from LinkedIn, app-store ranking, review velocity, whatever is observable. Say where each number came from. Two real numbers beat a page of narrative.
   4. Beat four, why this firm: stage, cheque size, sector fit, and what the firm specifically brings. If they lead $30m growth rounds, do not pitch a pre-seed. This beat is what separates a prepared candidate from someone reciting a favourite company.
   5. Beat five, the bear case and the price. Name the two things that would kill it, say what you would diligence first, and give a valuation view — what you would pay and why. A pitch with no price is not an investment recommendation.
   6. Then the return maths, briefly, because it is what they will ask: what has to be true for this to be a 10x. If you cannot get to a fund-returning outcome, say so and explain why it is still interesting, or pick a different company.

   Where candidates lose it

   Pitching a company already in their portfolio, or a household name where you have no edge. Check the portfolio page first. The second trap is describing the product for two minutes and never giving an investment view: no price, no bear case, no return maths. And pick something checkable — if you claim a revenue figure, know where it came from, because they will ask.

   Expect next

   • What would you pay for it, and what would you not pay?
   • What is the strongest argument against this investment?
   • What would you diligence first, and who would you call?

   Reported by candidates at Insight Partners (Software, New York, 2022); Insight Partners (Leveraged Buyouts, New York, 2023); General Atlantic (Growth Equity, New York, 2022); General Atlantic (Growth Equity, New York, 2021); Silver Lake (Technology, Media and Telecom, San Francisco, 2022). Source: Wall Street Oasis.

10. 080Tell me about a trend in technology or software products you have been following.Sector theses and marketsIntermediatefirst roundInsight PartnersSoftware · New York · 2022Bessemer Venture PartnersVenture Capital · New York · 2022

    Say this

    Pick a trend narrow enough to have a testable investment implication, then say who wins, who loses and what you would buy. A trend without a winner and a loser is an observation, and the failure mode here is describing something everybody already knows.

    Then walk it

    1. Structure: the shift, the mechanism, the winners, the losers, and the specific investment it implies. Five beats, two minutes.
    2. Pick something with a second-order consequence you can argue. Everyone can say 'AI is changing software'. The interesting version is a consequence: if AI agents do the work, seat-based pricing breaks, so software revenue shifts from headcount-linked subscriptions to outcome or consumption pricing — and that revalues every company whose growth model assumed seat expansion.
    3. Then the winners and losers from that mechanism. Winners: companies with usage-based pricing already in place, and those owning proprietary workflow data. Losers: seat-based tools whose net revenue retention depended on their customers hiring more people, which is precisely the metric that justified their multiple.
    4. Give one number that grounds it. Something like the share of the leading software companies' net retention historically attributable to seat expansion versus price increases, or the gross margin compression at companies paying large inference bills. Numbers are what make it look like work rather than reading.
    5. Then the falsifier, which almost nobody offers: what would tell you this trend is not happening. If net retention at seat-based leaders holds up over the next four quarters, the thesis is wrong and you should say what you would do about it.
    6. And connect it to the firm's mandate. At a software-focused growth fund, the trend should imply something about what they should stop buying, not just what they should buy. That is the version that gets remembered.

    Where candidates lose it

    Naming a trend so broad it is a headline — AI, cloud, remote work. The interviewer has heard it twenty times this week. Go one level deeper into a mechanism with winners and losers, and bring a falsifier. Also: have two trends ready, because the first follow-up is often 'give me another one'.

    Expect next

    • Who loses from that?
    • What would make you conclude you are wrong?
    • Give me another one, in a different sector.

    Reported by candidates at Insight Partners (Software, New York, 2022); Bessemer Venture Partners (Venture Capital, New York, 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.