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?

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.