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. 056Explain the power law and what it actually means for how you vote in a partners' meeting.Portfolio constructionIntermediatetechnicalEarly-stage VCSeed funds

   Say this

   Venture returns are not normally distributed — a small number of investments produce most of the return, and roughly half return less than the capital invested. It means the only question that matters in a partners' meeting is whether this company could return the fund, not whether it is likely to lose money.

   Then walk it

   1. The shape: across a typical early-stage portfolio, something like 50 to 60 percent of investments return less than 1x, a middle band returns 1 to 3x, and one or two return 10x or more and produce the majority of the fund's gains.
   2. So the asymmetry is total. The downside of any single investment is capped at 1x of a small cheque; the upside is unbounded. That means the cost of a false negative — passing on the outlier — is enormously higher than the cost of a false positive.
   3. Which changes the question you ask. Not 'what is the probability this works' but 'if it works, is it big enough to return the fund?' A company with a 60 percent chance of becoming a $200m business is a worse portfolio decision than one with a 10 percent chance of becoming a $10bn business.
   4. This is why consensus voting is dangerous in venture. The companies that produce outlier returns are usually the ones that divide the partnership, because by definition consensus ideas are priced. A firm where every investment is unanimous is probably screening out its best decisions.
   5. It also dictates reserves. If one company will produce most of the return, the right behaviour is to concentrate follow-on capital into the names that are working and stop funding the middle. The hardest discipline in the job is refusing to feed a decent company that will never be an outlier.
   6. The limitation worth naming: the power law is a description of outcomes, not a licence for recklessness. It gets misused to justify paying any price for anything with a big story. The constraint is still that the portfolio has to be constructed so that one outlier is enough — which means enough shots, and enough ownership in each.

   Where candidates lose it

   Reciting 'one investment returns the fund' as a slogan. The interviewer wants the consequences: how it changes the question you ask in diligence, why it argues against consensus decisions, and what it implies for reserves. And you should name the misuse of it, because 'power law' has become the standard excuse for undisciplined pricing.

   Expect next

   • How many investments does a fund need for the power law to work?
   • So would you back a company the whole partnership disliked?
   • What does this mean for how you allocate reserves?
2. 061How do you think about signalling risk from a multi-stage fund?Portfolio constructionHardsuperdayEarly-stage VCSeed funds

   Say this

   If a fund with a large Series A vehicle writes your seed cheque and then declines to lead your A, the market reads it as inside information that the company is not working. The seed capital comes with an option the fund holds and the founder pays for.

   Then walk it

   1. The mechanism: an incoming Series A investor asks why the seed fund with $2bn under management and an obvious ability to lead is not leading. There is rarely a good answer, and the absence of one prices the round or kills it.
   2. Why it is asymmetric: the multi-stage fund gets a cheap look at fifty companies and a free option on the best few. The founder gets capital plus a hidden liability that only appears at the next raise, precisely when they have no leverage.
   3. How founders manage it: take the multi-stage seed cheque as a small, non-lead participation alongside a dedicated seed fund that has no Series A vehicle, so there is no inference to draw. Or get an explicit, written commitment about what the fund will do at the A — which is worth less than it sounds but does change the conversation.
   4. How the fund should manage it, and this is the answer they want from someone joining one: be explicit at the time of the seed investment about whether this is a scout-style option or a genuine seed position, and if you do not lead the A, say why publicly and warmly to the incoming investors. Silence is what does the damage.
   5. The counterargument is real too: multi-stage money at seed is cheaper and comes with more resource, and many founders would rather have it. Signalling risk is a cost, not a disqualifier, and founders who price it correctly still often take the money.
   6. And the honest asymmetry from the fund's side: the signal cuts the other way as well. When a top multi-stage fund does lead the A, the round prices higher and fills faster than it would otherwise. Founders are buying a positive signal along with the negative option.

   Where candidates lose it

   Describing signalling risk as a founder problem only. In an interview at a multi-stage firm, the useful answer says how the firm should behave to reduce it, because that is a live internal debate at every one of them. And do not present it as a reason multi-stage seed money is bad — it is a cost to be priced.

   Expect next

   • How would you reduce it if you ran the seed programme here?
   • Would you rather have a dedicated seed fund or a multi-stage fund lead your seed?
   • What does it mean when a seed fund does not take its pro rata?

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.