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. 019Walk me through CAC, lifetime value and payback, and tell me how each one gets manipulated.Unit economics and cohortsCoretechnicalGrowth equity

   Say this

   CAC is all the money you spent to acquire a paying customer, divided by the customers you actually acquired. LTV is the gross profit that customer produces over their life, discounted. Payback is how many months of contribution margin it takes to earn the CAC back. Payback is the one I trust.

   Then walk it

   1. CAC properly done is fully loaded: paid media, sales and marketing salaries and commissions, tools, and any onboarding cost, divided by new paying customers in that period. Not just ad spend.
   2. LTV is gross-margin based, not revenue based: ARPU times gross margin, divided by monthly churn, discounted if the life is long. Using revenue instead of gross profit inflates it by whatever your cost of service is.
   3. Payback in months is CAC divided by monthly gross profit per customer. Best-in-class B2B SaaS is under 12 months, acceptable is 12 to 18, and above 24 months you are running a financing business rather than a software business.
   4. The three manipulations to look for. One, blended CAC that folds organic and word-of-mouth customers into the denominator while only counting paid spend in the numerator — always ask for paid CAC on paid customers. Two, LTV built on an early cohort's churn, which is always the best cohort. Three, a churn assumption of 1 percent monthly applied to a company that is eighteen months old and has never observed a five-year life.
   5. The practical rule I would state: LTV/CAC above 3 is the convention, but it is nearly meaningless without payback, because a 5x LTV/CAC with a 36-month payback will kill the company on cash before the ratio ever pays out.
   6. One real number to anchor it: at $12,000 CAC, $1,000 monthly revenue and 80 percent gross margin, payback is 15 months. If monthly churn is 2 percent, implied life is 50 months and LTV is $40,000, so LTV/CAC is 3.3x. Both numbers are fine; the fragile input is that 2 percent.

   Where candidates lose it

   Quoting LTV/CAC above 3 as if it settles the question, and using revenue instead of gross profit in LTV. Also: not asking over what period CAC was measured. Founders present a good quarter. Ask for twelve months and for paid-only CAC, and the ratio usually halves.

   Expect next

   • Why do you prefer payback to LTV/CAC?
   • What is a good payback period for consumer versus enterprise?
   • How would you calculate CAC for a marketplace?
2. 020What is the burn multiple and why do investors like it?Unit economics and cohortsIntermediatetechnicalGrowth equityLate-stage VC

   Say this

   Net burn divided by net new annual recurring revenue over the same period. It answers one question: how many dollars did you set on fire to buy a dollar of new recurring revenue. Under 1.5 is excellent, 1.5 to 2 is fine, above 3 means the growth is bought rather than earned.

   Then walk it

   1. The calculation: if you burned $12m in a year and added $6m of net new ARR, the burn multiple is 2.0. Net new ARR is net of churn and downgrades, which is the whole point — it punishes growth that is leaking out the back.
   2. Why it beats the alternatives: growth rate alone rewards companies that buy revenue, and efficiency ratios based on a single quarter can be gamed by pausing spend. The burn multiple is one number that captures both sides at once.
   3. Rough bands, and these hardened after 2022: under 1 is exceptional, 1 to 1.5 is very good, 1.5 to 2 is acceptable at scale, 2 to 3 needs a specific explanation, above 3 is usually a broken go-to-market rather than an investment phase.
   4. It is stage-sensitive and you should say so. A company going from $1m to $3m of ARR will have an ugly multiple because the fixed cost base dominates. From $20m to $40m it is a genuine judgement on efficiency.
   5. What it hides: a company can produce a lovely burn multiple by starving R&D and harvesting an existing base. So I read it next to net revenue retention and the R&D share of spend — good multiple plus deteriorating NRR is a company eating its seed corn.
   6. In practice this is now the first number a growth investor asks for, because it is the cleanest available proxy for whether more capital produces more company.

   Where candidates lose it

   Using gross burn or using total ARR instead of net new ARR. Both make the number look better and both are wrong. And quoting benchmark bands without adjusting for stage — a seed company's burn multiple is nearly uninformative, and saying so is part of a correct answer.

   Expect next

   • What is the magic number and how does it differ from this?
   • How would you fix a burn multiple of 4?
   • What is a good burn multiple for a Series A company?
3. 021What is the SaaS magic number, and what does a reading of 0.5 tell you?Unit economics and cohortsIntermediatetechnicalGrowth equitySaaS-focused funds

   Say this

   Magic number is the annualised increase in quarterly recurring revenue divided by the prior quarter's sales and marketing spend. A reading of 0.5 says every dollar of sales and marketing bought fifty cents of annual recurring revenue, which implies a payback of about two years. That is a hold, not a spend signal.

   Then walk it

   1. Formula: (current quarter revenue minus prior quarter revenue) times four, divided by prior quarter sales and marketing expense. The times four annualises it, and the one-quarter lag reflects that spend converts with a delay.
   2. Reading it: above 1.0 means gross payback inside a year, so step on the accelerator. Between 0.75 and 1.0 is healthy. Below 0.75 means fix the funnel before adding budget. Below 0.5 usually means the segment or the channel is wrong.
   3. So 0.5 implies roughly 24 months to recover the acquisition cost on a gross-revenue basis, and longer on a gross-profit basis. At that level, raising more money to hire more reps makes the company worse, not bigger.
   4. What I would do about it rather than just diagnose it: split the number by segment and channel. Usually one motion is at 1.2 and another is at 0.2, and the blended 0.5 is hiding the fact that they should stop selling to the small accounts.
   5. The weaknesses, which you should volunteer: it uses revenue rather than gross profit, so it flatters low-margin businesses. It is noisy quarter to quarter for small companies. And it treats sales and marketing as a single lump when brand spend and quota-carrying rep cost have completely different lags.
   6. Which is why in practice I would look at it alongside CAC payback on a gross-profit basis and the burn multiple. Magic number is the quickest read; it is not the deepest one.

   Where candidates lose it

   Getting the formula slightly wrong — forgetting to annualise, or using the current quarter's sales and marketing spend instead of the prior quarter's. And treating the benchmark as a verdict rather than splitting it by segment, which is where the actual insight is.

   Expect next

   • How does that differ from the burn multiple?
   • What is a good magic number at Series B versus Series D?
   • If it is 0.4, what do you tell the CEO to do on Monday?
4. 022Explain the rule of forty and when it stops being useful.Unit economics and cohortsCorephone / first roundGrowth equitySaaS-focused funds

   Say this

   Revenue growth rate plus profit margin should sum to at least forty. It is a trade-off rule: the market will fund growth or profit, but it wants to see that you are deliberately choosing, not accidentally failing at both. It stops being useful at small scale and when the margin definition gets fuzzy.

   Then walk it

   1. The arithmetic: 60 percent growth with a minus 20 percent margin scores 40. So does 10 percent growth with a 30 percent margin. Both pass; they are completely different companies and would be valued very differently.
   2. Which margin? Convention has settled on free cash flow margin, because EBITDA margin in software lets you hide stock compensation and capitalised software development. Ask which one the company is using — the gap is often 15 points.
   3. Why it works as a screen: it captures the real question of whether growth is being bought at a sustainable price, in one number a board can hold management to.
   4. Where it breaks. First, at small scale: a company going from $2m to $6m of revenue is growing 200 percent with a minus 150 percent margin, which scores 50 and means nothing. The rule is designed for $50m-plus businesses.
   5. Second, it treats a point of growth and a point of margin as equally valuable, and the market does not. At a given score, the market has historically paid a meaningful premium for the growth-heavy version, because growth compounds and margin does not.
   6. Third, it says nothing about durability. A company hitting 40 on a base with 85 percent net retention is on a treadmill, and a company hitting 35 with 125 percent retention is a far better asset. So I would use the rule to start the conversation and net retention to finish it.

   Where candidates lose it

   Reciting the rule without asking which margin. Companies quote EBITDA when it flatters them and free cash flow when that does. Also applying it to early-stage companies where it produces nonsense — knowing the scale at which the rule applies is half of understanding it.

   Expect next

   • Which margin definition would you insist on?
   • Would you rather have 50 percent growth at minus 10, or 20 percent growth at plus 20?
   • What does the rule miss entirely?
5. 023Walk me through a cohort analysis and tell me what you are actually looking for.Unit economics and cohortsIntermediatetechnicalEarly-stage VCGrowth equity

   Say this

   Group customers by the month they joined, then track each group forward over time. You are looking for three things: whether the curve flattens, whether later cohorts sit above earlier ones, and whether revenue per cohort grows after the curve flattens.

   Then walk it

   1. Build it as a triangle. Rows are join months, columns are months since joining, cells are the share of the cohort still active or the revenue they generate. Then read down the columns to compare cohorts and across the rows to see decay.
   2. First thing I look for: does the retention curve asymptote? A curve that flattens at 40 percent means you have a real product for 40 percent of the people you acquire. A curve that keeps sliding toward zero means you have a leaky bucket and paid acquisition is just filling a hole.
   3. Second: cohort quality over time. Later cohorts should retain better, because the product improved and targeting sharpened. If your newest cohorts are worse, either you are scaling into a lower-quality channel or the early cohorts were friends and design partners.
   4. Third, and this is where the money is: dollar retention within a flattened cohort. If month-24 revenue from a cohort exceeds month-1 revenue despite losing customers, the survivors are expanding and the business compounds without new sales.
   5. A concrete read: a consumer app at 25 percent D30 that flattens at 18 percent by month 6 is a real product. The same app sliding to 3 percent by month 6 is a paid-marketing treadmill regardless of how good the top-line growth chart looks.
   6. The two traps in the data itself: small recent cohorts look artificially good because they have not had time to churn, and a company that changed its pricing or its target segment mid-way has cohorts that are not comparable. Always ask what changed between cohorts.

   Where candidates lose it

   Describing the mechanics of building the table and never saying what a good one looks like. The whole value is in the three reads: flattening, cohort-over-cohort improvement, and dollar expansion. Also accepting aggregate retention — an aggregate number can look stable while every individual cohort is deteriorating, because new cohorts keep refilling it.

   Expect next

   • What does a flattening curve tell you that an aggregate churn number cannot?
   • What D30 retention would you want for a consumer app?
   • How would you spot a leaky bucket from the cohort table?
6. 024Give me the formulas for net revenue retention, gross retention and churn, and tell me which can exceed one hundred percent.Unit economics and cohortsIntermediatetechnicalGrowth equitySaaS-focused funds

   Say this

   All three measure the same cohort a year later. Gross retention counts only what you kept and is capped at 100 percent. Net retention adds expansion and can exceed 100. Churn is what you lost over what you started with. Neither retention figure includes revenue from new customers.

   Then walk it

   1. Gross revenue retention: starting ARR of a cohort, less churn and downgrades, divided by starting ARR. Expansion excluded, so it can never break 100 percent.
   2. Net revenue retention: starting ARR, less churn and downgrades, plus upsell and expansion, divided by starting ARR. Above 100 means the existing base grows on its own.
   3. Gross churn is one minus gross retention. Logo churn counts customers, not dollars, and the two diverge sharply — losing thirty small accounts and keeping two big ones can mean 30 percent logo churn and 95 percent dollar retention.
   4. Benchmarks worth knowing cold: best-in-class enterprise SaaS runs gross retention above 90 and net above 120. Mid-market sits around 85 and 105 to 110. SMB runs materially lower on both because small customers go out of business.
   5. Why it decides valuation: net retention above 115 percent means the business compounds without selling anything new, which is precisely what justifies a high revenue multiple. It is the single most predictive number in a software diligence.
   6. The manipulation to watch for: companies quoting net dollar retention on a subset — 'customers over $100k ACV' — which is always the best slice. Ask for it on the whole book, and ask whether it is calculated on a cohort or on a rolling trailing-twelve-month basis, because those give different answers.

   Where candidates lose it

   Mixing new-customer revenue into the retention calculation. It is a cohort metric and including new business flatters it badly. And not knowing which one can exceed 100 percent — that single detail reveals immediately whether you have ever actually built the number.

   Expect next

   • What does 140 percent net retention with 30 percent logo churn tell you?
   • Which matters more for valuation, growth or net retention?
   • How would you calculate net retention for a usage-based pricing model?
7. 027What metrics would you look at when valuing a retail company?Unit economics and cohortsIntermediatetechnicalSilver LakeTechnology, Media and Telecom · San Francisco · 2022

   Say this

   Same-store sales growth, gross margin, sales per square foot, inventory turns, and the payback on a new store. Retail is a unit-level business, so I would value the existing store base on cash flow and the growth story on how many more units can earn their cost of capital.

   Then walk it

   1. Same-store or like-for-like sales growth is the single most important number, because it strips out the flattering effect of opening stores. A chain with 30 percent revenue growth and minus 2 percent same-store sales is buying growth with capital.
   2. Unit economics of a new store: build-out cost, time to maturity, steady-state four-wall EBITDA, and therefore payback. Good specialty retail pays back in 18 to 30 months. Beyond that, expansion destroys value.
   3. Working capital and inventory. Inventory turns, weeks of cover, and the markdown rate. Retail failures are almost always inventory failures first — the P&L looks fine while the balance sheet fills with unsold stock that later gets discounted through gross margin.
   4. Cost structure: occupancy as a share of sales, because it is fixed and it is what kills you when traffic falls, and labour. Then the operating leverage question — how much can sales fall before four-wall EBITDA goes negative.
   5. For an omnichannel or e-commerce-heavy retailer, add CAC and repeat rate, contribution margin after delivery and returns, and the return rate itself, which in apparel can run 30 percent and quietly destroys the reported gross margin.
   6. Valuation itself: EV/EBITDA against peers, adjusted for lease obligations, since capitalised leases are debt in substance and post-IFRS 16 they sit on the balance sheet. And a sanity check on EV per store against replacement cost, which sets the floor.

   Where candidates lose it

   Valuing it like a software company on a revenue multiple, or quoting only same-store sales without the new-store payback. And forgetting leases — a retailer with $2bn of lease obligations and a headline low EV/EBITDA is not cheap, and in a tech-focused fund this is exactly the trap the question is set to catch.

   Expect next

   • How do you treat operating leases in enterprise value?
   • What is a good payback period on a new store?
   • How does the answer change for a pure e-commerce retailer?

   Reported by candidates at Silver Lake (Technology, Media and Telecom, San Francisco, 2022). Source: Wall Street Oasis.

8. 028How do you calculate runway, and how much should a company hold?Unit economics and cohortsCorephone / first roundEarly-stage VC

   Say this

   Cash on hand divided by net monthly burn, where net burn is cash out less cash in. The working answer since 2022 has been eighteen to twenty-four months at close of a round, because that is what it takes to hit milestones and still raise from a position of choice rather than necessity.

   Then walk it

   1. Net burn, not gross burn. Gross burn is total cash out; net is after collections. A company with $1m of monthly costs and $400k of collections burns $600k, so $9m of cash is fifteen months, not nine.
   2. Use a forward burn, not a trailing one. If they are hiring against a plan, burn in month twelve will be materially higher than today. Investors who quote trailing burn always overstate runway.
   3. The eighteen-to-twenty-four-month convention exists because fundraising takes three to six months and you need to be raising on nine to twelve months of cash, not three. Below six months, the terms are set by your balance sheet rather than your business.
   4. So the real question is milestone runway, not calendar runway: is there enough cash to reach the metric that makes the next round obvious? Twenty-four months of cash that gets you to a number nobody will fund is worse than twelve that gets you to one they will.
   5. The default-alive test is the sharper version of this. At current growth in revenue and costs, does the company reach profitability before the cash runs out? If yes, it is default alive and has genuine optionality. If no, it is default dead and the next raise is not a choice.
   6. One caveat on the arithmetic: a company holding customer deposits or deferred revenue has cash it has already sold. Runway off the gross cash balance overstates it, and that is a real error in marketplace and prepay businesses.

   Where candidates lose it

   Using gross burn instead of net, or quoting cash balance divided by last month's burn when the plan doubles headcount next quarter. And giving only a calendar number — the follow-up is always 'runway to what milestone', so build that into the first answer.

   Expect next

   • What is default alive versus default dead?
   • At what point do you tell a founder to cut?
   • How much runway should they have when they start raising?
9. 029How do the unit economics of a marketplace differ from a SaaS business?Unit economics and cohortsIntermediatetechnicalConsumer VCIndian venture capital

   Say this

   A marketplace has two customers and revenue is take rate on gross merchandise value, so the numbers to watch are contribution margin per transaction, liquidity, and repeat rate on both sides. SaaS has one customer and recurring contracted revenue, so retention and payback do most of the work.

   Then walk it

   1. Start with the revenue definition, because this is where founders obscure things: GMV is not revenue. Net revenue is take rate times GMV, and a company quoting a $500m GMV run rate on a 4 percent take rate is a $20m revenue business.
   2. Contribution margin per order is the core metric, and it has to be after all variable cost: payment processing, delivery, support, refunds, and any incentive or discount funded by the company. Indian food delivery and quick commerce both spent years with negative contribution margin per order while reporting GMV growth.
   3. Liquidity is the marketplace-specific concept with no SaaS equivalent: what share of listings transact, and how fast. It is the real measure of product-market fit, and it can look fine nationally while being broken in every individual city.
   4. So you analyse marketplaces city by city or category by category, never in aggregate. The question is whether the oldest, most mature city is profitable at the unit level, because that city is the only evidence of what the others become.
   5. Retention works differently on both sides. Supply-side churn is often the harder problem and is under-reported — a marketplace losing 60 percent of its sellers a year is permanently re-acquiring supply. And disintermediation matters: once buyer and seller know each other, do they transact off-platform?
   6. The genuine advantage over SaaS is capital intensity and network effects: no cost of goods in the classic model, and each side makes the other more valuable. The genuine disadvantage is that revenue is transactional, not contracted, so it can fall 40 percent in a quarter in a way software revenue cannot.

   Where candidates lose it

   Accepting GMV as the growth metric. Every marketplace deck leads with it because it is the biggest number available. Ask for net revenue and contribution margin per order in the oldest city, and know the word liquidity — that is the vocabulary check.

   Expect next

   • How would you calculate CAC for a two-sided marketplace?
   • What is disintermediation risk and how do you test for it?
   • Which side would you subsidise and for how long?

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.