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. 068Why is a structured round often worse for a company than a clean down round?Down rounds and secondariesHardsuperdayLate-stage VCGrowth equity

   Say this

   Because it preserves the headline valuation by burying the real price in terms nobody outside the deal can see. The company looks like it raised flat, but a 2x senior participating preference with a full ratchet means the common is worth far less than in an honest down round at a lower price.

   Then walk it

   1. What structure means in practice: multiple liquidation preference, participation, senior rather than pari passu ranking, full ratchet anti-dilution, guaranteed IPO returns or ratchets on the IPO price. Each one transfers value from common to the new preferred without touching the headline number.
   2. Run it. A flat $500m round with $150m of new money at 2x senior participating means the first $300m of any exit goes to the new investor before anyone else sees a rupee. At a $400m exit, the common gets almost nothing — worse than if the round had simply priced at $200m with clean terms.
   3. The second cost is compounding: structure is senior and it stacks. The next investor demands terms at least as good, so you get a tower of preferences, and by the third round the common is a call option struck impossibly high. Employees work out that their options are worthless well before the board admits it.
   4. The third cost is optionality on exit. A heavy preference stack means a $300m sale pays management nothing, so the team will not sell, so the company keeps raising. Structure removes the reasonable exits and forces an all-or-nothing outcome.
   5. The clean alternative: reset the price, take the dilution, refresh the option pool, and keep the stack at 1x non-participating. Everyone knows where they stand, the recruiting story is honest, and a mid-sized exit still pays the team.
   6. This was the defining mistake of the 2021 to 2022 period. A lot of companies protected a unicorn headline with structure and discovered two years later that the structure, not the valuation, was what made them unfinanceable and unsellable. Being able to say that with a specific example is what makes this answer land.

   Where candidates lose it

   Treating a flat round as good news. Any time a valuation holds in a bad market, the first question is what the terms were. A candidate who does not ask for the preference stack before commenting on a valuation has not understood how late-stage rounds are actually priced.

   Expect next

   • What is an IPO ratchet and who does it hurt?
   • How would you find out whether a reported valuation was structured?
   • As the founder, which would you choose and why?
2. 069Would you sell a position in the secondary market, and how is secondary priced?Down rounds and secondariesIntermediatetechnicalSecondariesGrowth equity

   Say this

   Yes, in three situations: the position has grown so large it dominates the fund, the fund is at the end of its life and needs to return capital, or my view has changed but the company is still marked up. Pricing is typically a discount to the last round, with the discount reflecting information asymmetry and the buyer's lack of rights.

   Then walk it

   1. Pricing mechanics: secondary trades reference the last primary round price, then discount it. Direct secondaries in strong companies can trade near or above the last round; ordinary positions in reasonable companies trade at 20 to 40 percent discounts; and in a weak market or a company that has not raised for two years, discounts of 50 to 70 percent are normal.
   2. What drives the discount: how stale the last round is, whether the buyer gets information rights or is buying blind, whether the shares are common or preferred, and transfer restrictions — most private companies have rights of first refusal and board consent on transfers, which alone knocks off value.
   3. Why a fund sells. First, concentration: a position at 40 percent of fund NAV is a risk-management problem regardless of conviction. Second, fund life — a ten-year fund in year eleven has LPs who want cash, and DPI is the number they judge you on. Third, a changed view while the mark is still good.
   4. The other side of it, which is the more interesting answer in an interview: buying secondary. Late-stage secondary is where a lot of the best risk-adjusted venture returns have sat since 2022, because you can buy a company with real revenue at a large discount to a price that was set in a completely different market. The diligence problem is that you may get no access to the company.
   5. Then the structures: direct secondary from an early investor or employee, an LP-interest sale of a whole fund stake, a continuation vehicle where the GP moves assets into a new fund with new capital, or a strip sale of several positions. Each has different pricing and different conflicts.
   6. And the conflict I would name: a GP selling to a continuation fund they also manage is on both sides of the trade. That requires an independent valuation and an LP advisory committee sign-off, and it is the governance issue LPs currently care most about.

   Where candidates lose it

   Treating secondary as a distressed-only market. Since 2022 it has been a core part of how venture liquidity works, and employee tender offers and continuation vehicles are routine. Also quoting a discount without naming what drives it — staleness, rights, and transfer restrictions are the three levers.

   Expect next

   • How would you diligence a secondary position with no access to the company?
   • What is a continuation vehicle and what is the conflict?
   • Would you buy or sell in today's market?

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.