vc interview case study

Venture Capital Case Study Interview Guide

If you’re a prospective venture capitalist or seeking to enter the exciting world of venture capital, you’re probably familiar with the importance of case study interviews.  Venture capital firms  are keen to identify the best candidates who understand their approach and have the necessary skills to work alongside entrepreneurs.

In this comprehensive guide, we will cover everything you need to know to ace your  venture capital case study  interview. We’ll provide insights into the venture capital  interview process  and discuss the most common interview questions. We’ll also share our tips on how to prepare and master case studies, analyze industry trends, and navigate  technical questions  and  financial modeling  exercises.

Key Takeaways

• Successful  venture capitalists  need an in-depth understanding of the industry and current  market trends .
• Case study interviews are designed to test your analytical and problem-solving skills and your ability to work with teams and entrepreneurs.
• Some of the most  common venture capital interview questions  are aimed at evaluating your fit for the role and the firm.
• Valuation  and  investment thesis  play a crucial role in venture capital decision-making.
• Thorough preparation, including studying sample questions and frameworks, is essential for success in  VC case study  interviews.

Understanding the Venture Capital Interview Process

Before diving into case study interviews, it is essential to have a comprehensive understanding of the venture capital  interview process . The process typically begins with an initial screening, where the candidate’s qualifications and skills are assessed. If the candidate passes the initial screening, the firm may conduct a follow-up interview, which may be conducted by a more senior member of the team.

In some cases, firms may also require candidates to complete an assignment or provide a writing sample. Following this round of interviews, successful candidates are invited to participate in final rounds, which may involve meetings with additional members of the team or a more in-depth panel presentation.

One of the key components of the venture capital  interview process  is the ability to effectively articulate your thoughts and ideas. Strong communication skills, including the ability to present complicated information clearly and succinctly, are essential for success in this industry. Additionally, candidates should be prepared to demonstrate their analytical skills, their understanding of industry trends, and their ability to work collaboratively as part of a team.

When  preparing for a venture  capital interview, it is essential to research the firm thoroughly and familiarize yourself with their investment philosophy, portfolio companies, and recent activity. A strong understanding of the firm’s focus areas and investment strategy can help you tailor your responses to their specific needs and increase your chances of success.

VC Interview Questions

VC interview questions  are designed to assess a candidate’s fit with the firm and their qualifications for the role. Common  VC interview questions  may include:

• Why do you want to work in venture capital?
• What do you think differentiates our firm from other  venture capital firms ?
• Can you discuss a deal you found particularly interesting and why?
• How would you value a company?
• What are some current industry trends?

By understanding the  venture capital interview  process and preparing thoroughly, you can increase your chances of success in this highly competitive industry.

Preparing for a Venture Capital Case Study Interview

Preparation is key to delivering a standout performance in a  venture capital case study  interview. Developing an effective strategy requires thorough research and practice. Here are some tips to help you prepare:

Research the VC Firm

Start by researching the  VC  firm you will be interviewing with. This will provide insights into their investment focus, ethos, and portfolio companies. Analyse their website, social media accounts, news articles, and other sources of information. This will help you understand the firm’s investment criteria and identify areas where you can align your background and experience with their interests.

Practice With Case Studies

Case study interviews are a crucial part of the  venture capital interview  process. Practise with mock case studies and analyse how successful  VC funds  have invested in real-world scenarios. This will enhance your analytical abilities and problem-solving skills, bringing you closer to the mindset of a  VC  analyst or associate.

Be Prepared to Frame Your Approach

In a  venture capital case study  interview, there is often no one “right” answer to a problem. Interviewers are more interested in your analytical approach and thought process. They want to see that you have the skills to break down complex problems and communicate your thinking in a clear and concise manner.

Be prepared to frame your approach by breaking down the problem, identifying key assumptions, and narrowing in on the key issues. Developing a structure can help ensure your analysis is comprehensive and well-organized.

Be Ready for Technical Questions

VC  interviews often include questions about technical topics related to venture capital and finance. Brush up on key concepts such as  valuation , term sheets, and financial modelling. This will allow you to discuss these topics articulately during the interview and showcase your expertise in the field.

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

By following these strategies, you will be better prepared to tackle a  venture capital case study interview . Remember to keep calm, stay focused, and communicate your thoughts clearly and logically. Always be ready to justify your assumptions and pivot your approach based on new information provided during the interview.

Common Venture Capital Interview Questions

In order to prepare for your  venture capital interview , it’s crucial to have an understanding of the common questions that may be asked. These questions are tailored to evaluate your fit for the role and the firm.

Specific Questions

One common question focuses on your experience as it relates to the venture capital industry. Interviewers often want to know how you’ve gained knowledge and what relevant experiences you’ve had. Another question centers around what value you could bring to the firm and whether you have any specific expertise that would be beneficial to their investment strategy.

Interviewer Expectations

Interviewers are looking  for candidates who have a strong understanding of the industry and the firm’s investment focus. They want to see evidence of strong analytical skills, critical thinking, and an ability to identify and capitalize on excellent investment opportunities. Additionally, they look for candidates who are adaptable and can work collaboratively within the firm.

“One common question centers around what value you could bring to the firm and whether you have any specific expertise that would be beneficial to their investment strategy.”

Mastering the Case Study Interview

During a  venture capital case study interview , the interviewer typically presents a business case related to the industry or market to assess your analytical, problem-solving, and communication skills. A  case study interview  is your opportunity to showcase your ability to analyze a problem or situation, evaluate potential solutions, and develop a coherent and persuasive argument.

Preparing for a  case study interview  involves understanding the case study methodology and identifying the key elements of the problem to solve. Generally, case study interviews follow a structured format:

• The interviewer presents the case study, along with any relevant background information and data.
• You have time to review and analyze the case study before presenting your analysis and proposed solution(s).
• You present your analysis and proposed solution(s) to the interviewer.
• The interviewer may ask follow-up questions to test your assumptions, methodology, and problem-solving skills.

To succeed in a  case study interview , it’s crucial to follow a structured approach and demonstrate a thorough understanding of the problem and its context. In addition, your analysis should be supported by credible data and logical reasoning.

One effective framework for structuring your case study analysis is the “Issue-Tree” method.

Issue-Tree Method

The issue-tree method involves breaking down a complex problem into smaller, manageable components, and identifying the cause-and-effect relationships between them. The framework allows you to analyze the problem systematically and develop a clear, structured argument.

As shown in the table, the issue-tree method involves identifying the problem, breaking it down into smaller “causes” and developing “hypotheses” for each cause. You then gather relevant “data” to test each hypothesis, and derive “conclusions” based on the data.

Remember to emphasize your communication and presentation skills during the interview. You should be able to present your analysis and solution(s) in a clear, concise, and persuasive manner.

Understanding the Venture Capital Industry and Market Trends

Having a deep understanding of the venture capital industry and staying on top of the latest  market trends  can give you a significant advantage in a case study interview. The venture capital industry is driven by  venture capital firms  and  venture capitalists  who invest in startups with high growth potential in exchange for equity.

According to Pitchbook, venture capital firms invested over £10 billion in the UK in 2020, despite the challenges posed by the pandemic. While the first quarter of 2021 saw a decline in venture capital investment, due to uncertainty related to Brexit and the pandemic, the industry rebounded in the following months.

It’s important to stay up-to-date with  market trends  to understand which industries and sectors are currently receiving the most investment, such as healthcare, fintech, and sustainability. By keeping tabs on market trends, you can develop a perspective on where the industry is headed and which startups are most likely to succeed.

“The key players in the industry include Accel, Sequoia Capital, Index Ventures, and more. It’s crucial to research these firms and the types of startups they specialize in, in order to tailor your preparation for your interview.” – Jonathan Davies,  VC Associate

Valuation and Investment Thesis in Venture Capital

Valuation  and  investment thesis  play a crucial role in making sound venture capital investments. Before investing in a startup,  venture capitalists  need to determine its valuation and align it with the firm’s  investment thesis . Valuation is the process of determining a company’s worth based on its assets, market potential, and future growth prospects. A startup’s valuation can also be influenced by market trends and competition.

Venture capitalists develop investment theses to guide their investment decisions. An investment thesis is a set of criteria that a startup must meet to be considered for investment. Factors such as industry, market potential, management team, and technology can influence a venture capital firm’s investment thesis. The investment thesis also shapes the firm’s portfolio and helps attract investors to its  VC funds .

When considering investment opportunities, venture capitalists need to ensure that a startup’s vision aligns with the firm’s investment thesis. Investing in a startup that does not align with the firm’s investment thesis could lead to strategic misalignment and poor returns.

Valuation Methodologies

Venture capitalists use various methodologies to value startups. The most common valuation method is the discounted cash flow (DCF) analysis. The DCF method involves estimating a startup’s future cash flows and discounting them back to their present value.

Another commonly used valuation method is the market-based approach, which compares a startup’s valuation to that of similar companies in the market. The market-based approach involves using multiples such as price-to-earnings ratio (P/E ratio) or price-to-sales ratio (P/S ratio) to determine a startup’s valuation.

Factors to Consider in Developing an Investment Thesis

Developing a sound investment thesis requires careful consideration of various factors. These include the target industry, stage of the startup, management team, competition, and market potential. A thorough understanding of these factors can help venture capitalists make informed investment decisions.

Navigating Technical Questions and Financial Modeling

Technical questions  and  financial modeling  are crucial components of a  venture capital case study interview  that test your analytical and strategic thinking skills. As a  VC associate , you’ll be expected to evaluate startups, assess market opportunities and risks, and develop investment strategies that align with your firm’s vision.

Here are some tips for approaching  technical questions  and  financial modeling  exercises:

• Understand the problem:  Read the case study carefully, and make sure you understand the goals, constraints, and relevant data points.
• Organize your thoughts:  Create a logical outline or framework for your analysis, and break down complex problems into smaller, manageable parts.
• Use data wisely:  Use financial models, graphs, and other visual aids to communicate your findings and support your arguments.
• Be flexible:  Be open to new ideas, alternate solutions, and different perspectives. Venture capital is an ever-changing industry, and being adaptable is key.

Here are some common types of technical questions and financial modeling exercises:

To prepare for technical questions and financial modeling exercises, try practicing with sample case studies and reviewing industry reports and market research. Build your analytical toolkit with courses, books, and online resources, and stay up-to-date on the latest trends and technologies in the venture capital industry.

With this comprehensive guide, you are now equipped with all the necessary tools and insights to succeed in your venture capital case study interview. Remember to understand the interview process, thoroughly prepare for the case study interview, and master the common interview questions. It’s also important to stay up-to-date with industry trends and understand the valuation and investment thesis process. Finally, be confident in navigating technical questions and financial modeling exercises. Good luck with your venture capital interview!

What is a venture capital case study interview?

A venture capital case study interview is an interview format commonly used by venture capital firms to assess a candidate’s ability to evaluate investment opportunities. It typically involves analyzing a hypothetical or real-life investment scenario and presenting recommendations based on your analysis.

How should I prepare for a venture capital case study interview?

To prepare for a venture capital case study interview, familiarize yourself with the industry and its trends, practice analyzing case studies, and develop a structured approach to problem-solving and decision-making. You should also be comfortable with financial modeling, valuation techniques, and presenting your findings in a clear and concise manner.

What are some common venture capital interview questions?

Common venture capital interview questions  include inquiries about your investment thesis, previous investment experience, knowledge of the industry, and how you would evaluate a potential investment opportunity. Interviewers may also ask behavioral questions to assess your ability to work in a team and overcome challenges.

How do I demonstrate my industry knowledge in a venture capital interview?

To demonstrate your industry knowledge in a venture capital interview, stay updated on market trends, follow industry blogs and news outlets, and research the investment portfolios and strategies of the venture capital firms you are interviewing with. Being able to articulate your understanding of industry dynamics and align it with the firm’s investment thesis will make a strong impression.

What should I expect during a venture capital case study interview process?

During a venture capital case study interview, you can expect to receive a case study prompt or scenario, analyze the given information, and present your recommendations. The interviewers may ask you clarifying questions, challenge your assumptions, and assess your ability to think critically and make sound investment decisions.

How can I best showcase my analytical skills in a venture capital case study interview?

To showcase your analytical skills in a venture capital case study interview, demonstrate a structured approach to problem-solving, use relevant financial models or frameworks to support your analysis, clearly articulate your assumptions, and explain the rationale behind your recommendations. It’s also important to communicate your findings in a concise and persuasive manner.

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The Ultimate Venture Capital Interview Guide

enture capital is a notoriously tough industry to break into. Some even say you’ve got a better chance of becoming a professional baseball player. While that might not be exactly true, it does underscore an important truth—Venture, like baseball, is a very competitive industry, and that means if you want to break in, you’ve got to practice, practice, practice. 

Compounding these difficulties is the fact that the Venture Capital industry is the combination of people from all sorts of personal and professional backgrounds. There is no standard, college major, or specific prior work experience that anyone can point to as a significant factor in contributing to success in the industry. This, in turn, makes the VC interview process a challenging one for which to prepare. 

At GoingVC, we believe that the Venture Capital industry benefits with this type of diversity and transparency. Part of making that a reality comes from ensuring aspiring VCs have access to the necessary resources to begin careers within the industry. To help with that mission, we collaborated with our global network of venture capitalists, mentors, and advisors to develop this VC Interview Guide. 

How Should You Prepare? 

We’ll start by using common exercises and tools to help you prepare for practicing and developing answers to the most common VC interview questions. The key to creating a framework for preparing for interviews is to ensure you are prepared to answer questions that cover each of the below elements:

Who : Who are you, and are you a good fit for the role and the firm?

What : What makes you qualified for the role? What evidence can you provide to support that?

Where : Where have you succeeded and struggled, and what did you learn from those experiences? 

Why : Why this role at this firm, and why in the past did you make the choices you did? 

How : How will you contribute to the firm? 

Excelling in an interview, however, extends beyond merely answering the questions and includes persuading the interviewer to agree with you. Through out this guide, our goal is to help you do just that, in addition to highlighting insights from our community on what to expect. 

There are three main entry points into the venture capital industry: early career, post-MBA, and at the senior/partner level. Our scope within this guide is for those seeking early-career and post-MBA roles. We find that these roles are the most commonly available and where a general framework can be applied. 

The STAR-(L/P) Framework 

One way of answering behavioral questions like ‘tell me about a time when…’ is the STAR-(L/P) Framework. 

Situation - what was the event or challenge? 

Task - what were you responsible for? 

Action - what steps did you take, or how did you solve the problem? • Result - what was the outcome of the event/problem? 

Learning/Planning - what did you learn from the situation, or how planning on exploring it further? 

Here’s an example of how you can use this framework to answer the question, “Tell me about a time when you failed?” 

“As the founder of ABC Tech three years ago, I was struggling to figure out why our beta users were not receptive to the product. I needed to figure out if this was a product problem, a market problem, or something else, so I just started calling and emailing each person and offering to buy them coffee if they’d meet with me for 15 mins to chat about our product. Eventually, we learned that many of our potential customers who worked for larger companies had similar solutions already in place and weren’t looking for another tool for their tool belt - what they were looking for was a way to connect all the tools. At that point, we had already sunk in so much money into the product, pivoting to something entirely different was an insurmountable challenge, and despite our best efforts, we failed. From this, however, I learned how critical it is up front to incorporate user feedback as early as possible to determine if the product is a “nice to have” or a “need to have” and how that might dictate the development and market - which we clearly got wrong.”

Leading With Your Story 

All great VCs are excellent storytellers. 

I want to be a VC. 

Therefore, ___________. 

Did you ever study for a test using the brute force method? You scoured the internet and looked for every question you could find before spending hours writing out the answers to each one? 

It may have worked for a college exam with a narrow scope, but when it comes to preparing for a venture interview, it’s not an approach we at GoingVC would recommend. Instead, spend your time perfecting your story and getting ready for the questions you’re most likely to be asked. 

Great VCs are not coincidentally excellent storytellers. VCs need to be able to weave together lots of information, distill data, and put together a coherent story for partners to digest quickly. Whether you’re a startup founder, a VC, or interviewing to be one, being able to concisely share your story is critical to your success and an important skill to develop and demonstrate. 

The good news is that it only takes a couple of hours to improve your answer dramatically. And the great news is that a compelling story can help navigate the interview in a direction that serves you best. 

Tell Me About Yourself 

“Tell me a bit about yourself”, “Walk me through your resume”, and “I’d love to hear more about your journey” — you can expect most VC interviews to start with some variation of these. 

Your goal is to tell a compelling story with an upward career arc. One that has not only prepared you but makes you the ideal for the role. It should be mostly professional, but adding a few personal flourishes can make you appear genuine and add color. 

Below we discuss three ways you can build answers to these questions. The first starts with collecting everything you can think of and then picking out the most relevant parts of your past, present, and future (goals). The other two take the opposite approach, starting with brevity and expanding from there. It’s up to you to determine what you think works best for your background.

Start With Abundance

While in the actual interview, you’ll want to keep your answers reasonably brief, a couple minutes or less, it’s often easier to start with abundance and refine afterwards. If you’re going to give this approach a try, start by writing out anything you think might be relevant in the following three categories: 

1.  Past - What did you study? Where did you grow up? How did you develop an interest in venture capital? Was there a specific person or event that sparked it? How did your interests grow over time? How did you develop the skills needed for this particular role? 

2.  Present - What do you do now? How do you spend your time? What skills has it helped you develop? If you have any recent big-wins or achievements, be sure to include them. 

3.  Future - What are your goals for the future? What do you want to do, and how will this specific role help you get there? 

Now, armed with all this information, you’re ready to refine it into a compelling career narrative. Pick-out the salient points and think about how you can link them together in an upward arc. Try as much as you can to personalize it for the specific firm/role. 

Starting Small 

If you find yourself struggling to pick-out what’s necessary and what’s relevant, it might be helpful to take the opposite approach and start small. In To Sell is Human (2012), Daniel H. Pink introduced a couple of great strategies for developing a concise pitch that we like at GoingVC—the one-word and the subject line pitch. 

The One Word Pitch 

If you had to distill your story to one word, what would it be? While we don’t recommend actually using a one-word answer, starting with one can help you cut through the noise and stand out in a crowded field of candidates. “Nowadays, only brutally simple ideas get through.” - Maurice Saatchi, co founder of advertising agency Saatchi & Saatchi 

Question: How would you describe your work experience? 

Answer: Challenging 

(From here expand on what your one-word means to you. Perhaps you always sought out challenging roles, experienced failure early on, you had to learn from, etc. Use it as a foundation upon which to build your story.)

The Subject-Line Pitch

An alternative approach to starting small is the subject-line pitch, an answer with the length and feel of an email subject line. Great subject lines both convey to the reader roughly what to expect but also leave them wondering exactly what’s inside. 

Answer: Here’s a few things I learned from building a company and watching it completely fail. 

(Here you lead with an intriguing introduction and follow up with the story and how it relates to your past work experience). 

Putting It All Together 

This is where the fun begins; it’s time to take everything you’ve collected and start putting it all together. As mentioned previously, don’t forget to address the who, what, why, and how, where necessary. When thinking about an event, ask yourself: 

1. What happened? 

2. Who was involved? 

3. Why did it happen? 

4. How did it help prepare you for what you did next? 

Below we borrow and adapt from several of the basic business storytelling frameworks introduced by Esther Choy in Let the Story Do the Work (2017) to the VC interviewing process.

Creating an Origin Story (Your Background) 

I grew up in [city]. Went to [school name] to study [major] because [reason]. [business/career] started when [interesting challenge, opportunity, or connection between two previously unrelated ideas]. Because [I/we] realized [how you decided this idea was big enough to be a business/that opportunity to fit your vocation]. This idea grabbed [me/us] because [how the idea combined with your own internal drive/came at just the right time]. With the help of [people or resources], [company’s initial launch/stabilizing your career]. At first, [problems]. But then, [solutions]. Today, _____ no longer ______ [what has changed since point of origin]. But the same [vision that guided you initially] now [how that vision continues to shape your company/career today]. 

I grew up in Seattle. I went to UCLA for undergrad and studied engineering physics because I was always really interested in how the universe worked. My engineering career started when I got the opportunity to intern at RocketCo. I realized that the only way to figure out how the universe worked was to get out and explore it so I joined RocketCo. I learned a lot at RocketCo, and had a great manager there. It was actually through his championing that one of my side-projects, the LightDrive. ended up getting productized. We had a lot of problems at first with the guidance system, but we were able to work grind away and figure it out. Today, I am a product manager, not a rocket engineer. I might not be trying to explore space anymore, but that same to figure out how big systems, like the universe, work is still with me. 

The Quest (Why and How You Got Here) I want _____. I want [it/to-do it] because [your backstory. Introduce the main characters and set the hook]. To get it, I [action]. However, something got in my way: [your journey of overcoming obstacles and challenges to get what you want]. At the time, I was thinking that [the assumption you had or the worldviews you held at the beginning of your journey]. The turning point came when [a breakthrough moment when you realized you had to change your assumptions]. When that happened, I realized [the main learning point for you in this story]. After that, I [what you did as a result of that realization]. What I also realize now is that [reasons your story is relevant to your audience].

I want to work in the Venture Capital industry. I want to because throughout my career I’ve been interested in emerging technologies and solving problems, especially in the consumer technology industry. To make that happen, I’ve spent the past three years developing a small angel portfolio by investing in startups through non-accredited investor platforms. However, something got in my way: I didn’t have the resources necessary to make this a full-time job. At the time, I was thinking that investing in startups could be done without the network available to firms such as yours. The turning point came when I met Andrea through a networking event hosted by a company I’ve been researching. After that, I spent time reading everything I could about your company and getting coffee with some Associates to better understand what exactly you’re looking for in this role. What I also realize now is that the skills I’ve developed in my past roles have direct application to the Venture Industry. Pro Tip: Why are stories crucial for interviews? As Carmine Gallo, in ‘Talk Like TED’ (2014), notes, “Bryan Stevenson, the speaker who earned the longest standing ovation in TED history, spent 65 percent of his presentation telling stories. Brain scans reveal that stories stimulate and engage the human brain, help the speaker connect with the audience and make it much more likely that the audience will agree with the speaker’s point of view. 

Introducing Data 

Want to take your story to the next-level? Introduce some data. 

The Venture Capital business also hinges on the collection and use of lots of different types of information. What about when you need to incorporate data within your story? Data can help make key insights from your story stand out and provide concreteness to the examples you provide, especially when questions specifically ask for outcomes of specific actions. Data storytelling, according to Choy, “Helps you keep your audience and purpose in mind to communicate data in a way that will address the audience’s deepest cognitive needs.” 

Key to delivering a data-driven story is structured logic and sticking to the relevant facts. To create an effective, data-driven story, the following steps are needed, per Choy:

1. Practice Empathy: Put yourself in the audience’s shoes 

2. Prove and Persuade: Know when to do which 

3. Words Over Numbers: Emphasize words to ensure retention of key numbers

4. Create Meaning: Identify and emphasize the “so what” 

5. Give Them What They Want, Tell Them What They Need: Focus on what your audience needs to hear 

Practice Empathy 

It’s critical, even when presenting a data-driven story, to remember and be empathetic towards your audience. Doing so will ensure that non-data-driven people still understand your message and story. Keeping your audience first and foremost, and selecting data points you believe will be most fulfilling to them will help you both effectively make your point and make it more easily recallable by your audience. 

Prove and Persuade 

Most interviewers will ask you to prove any points or assertions you make, basically presenting the data you have to support them. But some will go farther and need to be persuaded. Be prepared to go beyond reciting facts and figures, by understanding what they mean—the ‘what’ and the ‘why so that you can convince them to believe what you believe. 

Words Over Numbers 

“Carmine, when primitive man ran into a tiger, he did not ask, ‘How many teeth does the tiger have?’ He asked, ‘Will it eat me?’” - Carmine Gallo, Talk Like Ted (2014) 

Surely this has to be backward, right? We’ve been talking about the importance of numbers, but the key to telling a data-driven story is learning how to emphasize the right words to convey what the data means - and use the data to support that story. Facts, stats, and data are meaningless without context (and boring when simply rattled off), so being able to effectively describe the data and it’s importance helps your audience grasp and remember what you’re saying. It’s also important to start with the big picture before diving into the details. Beginning by connecting with something familiar and high level helps set the scene for a deeper dive.

Create Meaning 

Extending the prior point, focus on the ‘why’ aspect of your data. Why does the data matter to the findings, to the audience? Spend more time trying to understand the why rather than the what and how. Why should they care about what you’re telling them? Why is it relevant to your role? Their firm? Now? Pro Tip: Back to Gallo, who says the human brain loves novelty. Teaching people something new creates something unexpected and can jolt people from a status quo bias or preconceived notions. 

Give Them What They Want, Tell Them What They Need It’s important to ensure you’re grabbing and delivering the most salient and value-add points to your story when talking about the data. If your data doesn’t exactly support what the questioner is asking, start by giving them what they want - but lead into your case by setting up a counter-argument that is backed up with a compelling data story. This strategic pivot, supported by well-researched data, can prove you have information and knowledge that may be in addition to those required in the role, a real benefit for the company. 

Congrats! You’ve successfully put together a framework to answer questions through storytelling. You now have a concise, compelling narrative that connects where you started with where you are today and how it prepares you to work in venture capital.

The Interview 

Background & behavioral questions .

What should you expect during a VC interview? At a minimum, expect questions regarding you and your background, the firm, the role (deal flow sourcing, due diligence and screening, terms and valuations, portfolio management, and LP support), and requesting for supporting examples and case studies. 

Given the most likely starting point is an opportunity for the firm to get to know you a bit, that is where we’ll start. 

Above we built a framework for answering what will most likely be the first question you are asked in an interview. Background & behavioral questions will also show-up in almost any interview. Just like with your career story, your answers should show fit, an upward career trajectory and explain why you are perfect for the role. 

Why do you want to work in venture capital? Why right now? 

What excites you about VC? Getting to work with a variety of startups? Playing a role in bringing new companies into the world? Tie your answer back to your career arc and why now is the time. 

How you can discuss your ability to integrate information and make decisions when it comes to identifying promising opportunities gets at the heart of what VCs do. What in that process most excites you? 

It’s also important to understand the Venture industry. If the firm has a blog, be sure to read it to understand their perspective and generate questions for the firm (or have answers to questions they’ve posed within their content). 

Where do you want to be in five-years? 

Junior VC roles typically come with finite lengths. What do you plan to do next? Stay in venture? Work at a startup? Get your MBA? You’re not committing to anything here, but you should give some thought to it.

In the event the role is a pre-MBA associate, the exit opportunity is rather obvious. In the event it’s still unclear, try to instead focus on what you intend to do for the firm in your time there and offer suggestions on where that may lead you (into entrepreneurship, into an MBA, up the ladder). 

What are some of your biggest strengths and most significant challenges? 

Strengths—it’s time to wave the flag here, where do you think you excel? VC roles are multidisciplinary, so there’s a lot that’s potentially relevant, but try and relate it to the job. 

Challenges—no one is perfect, including VCs. Be genuine, don’t pretend your career has been easy up to this point. Get specific about why the challenges you faced were challenging. Wrap it up from a positive angle by talking about what you’ve learned or how you’ve grown. If you’ve had experience at a startup that’s failed, leverage what lessons you learned. What about investments you’ve made (if even on paper) that didn’t turn out as you had expected? 

Ever grinded out an 80-hour workweek? If nothing else, talking about small failures and how you overcame them. Demonstrate resilience and an ability to adapt and learn - critical skills for VCs, an industry shaped all too often by failure. 

Why VC and not a startup or launch your own company? Think about what makes Venture different than working within a portfolio company. The broader exposures, ability to work with multiple teams and across different industries, to name a few. What excites you about how VCs interact with companies? 

Tell us something we don’t know from your resume? VC firms are often composed of small teams. Therefore, being able to relate to, work with, and grow as a team are important. Stepping aside from your professional experience to better inform your potential teammates of who they will be working with can be fun and rewarding - so be honest and be yourself (and have a story prepared!).

Investment Questions 

Investment & market-related questions are another group of questions commonly found in venture capital interviews. It’s critical that you can think through and develop your own investment or market opinions. Be ready to explain and defend your reasoning. 

What’s your favorite startup(s) right now? 

Come prepared with two or three different answers, dig deep and try and find something beyond the big names. Bonus points if you can articulate why you believe others are undervaluing the company or its growth trajectory. 

Be sure to cover each of these areas: A company description including the problem and company solution, team overview, traction, competitors and why the company fits into the firms’ strategy (stage, geography, industry, etc.) and your personal interest (personal experience with industry or problem, use of the product, etc.) 

What sectors are attractive to you? 

Similar to the above. Be able to articulate what excites you about the industry and why you think it’ll continue to grow in the future rapidly. Be ready to talk about a few promising companies as examples. 

While it may be tempting to spend time researching a dozen exciting-sounding companies, better yet is to spend that time researching one or two companies extensively (i.e. depth over breadth). Even better is to develop a full investment thesis and actually get the founders on the phone to ask them questions as if you are a potential investor. Can’t do that? At a minimum ensure you’ve used the product, signed up as a beta tester or dialed into any calls or product demos. As always, ensure the company is relevant to the firms’ comfort area - no sense pitching an idea they would immediately pass on for screening reasons. 

What’s a company or market you think is overvalued? Break out your inner contrarian and develop an argument that goes against the widespread consensus. Find potential red-flags in their approach and explain why you think the market might be smaller or grow slower than most believe.

Be sure to back this up with data - use valuations, industry data, or the like to persuade the interviewer you’re not just reiterating something you read on the web. Be able to make a convincing argument citing industry trends, historical examples of peers, or first-hand experience. 

What do you expect your day to day to look like in this role? 

The best option here is to have done your homework. If you can offer to get coffee with any Associates (past or current) at the firm (or a similar one) to ask about the daily operations, that would be best. Other than that, reading the blog and subscribing to their newsletter or following on social should provide clues. Do they talk about their process? Insights into recent fundings? Have they visited conferences? Surmising what a day in the life might look like from what those across the firm appear to be doing are good guesses. 

How would you perform due diligence on a company you like? 

While developing a sound due diligence process and being able to speak to it is critical here, it’s also important to tailor that to the firm. Know what sectors, industries, technologies, geographies, and stages they invest in. Is there a commonality in traction within their portfolio companies? How about team traits? What seems to be the most important factor(s)? 

How would you source companies? 

VCs are known for having extensive networks and relying on them to find credible deals. How would your network work as a source of deal flow? Beyond your network, consider the blogs and articles you follow. What unique ways would you source deals on your own? Would you consider building a tool or starting your own newsletter? Would you lend a hand if you have relevant skills to promising entrepreneurs to build relationships? 

The most interesting exit of the year? 

Here is where signing up for VC newsletters and following blogs helps. Tuning into sites like Techcrunch, Hacker News, Crunchbase, and CBInsights reveal lots of information on deals and exits. 

Consider choosing a company you know and have followed for some time and talk about how you have seen their company progress.

What’re your top questions in the first meeting with a founder? 

Consider thinking of one company in which you would invest your life savings. What questions would you ask the founders of that company? Be sure to run through the typical screening questions like the problem and the solution, market size, and fit but also be sure to ask about the team - how did they meet, what are their backgrounds? What are the competitive advantages they intend to capture as they build their company moat? You will typically have some background information on the firm before the meeting, whether that be through seeing a pitch deck or general research. Thus, you want to dig deep, ask hard questions, and quickly pinpoint the key opportunities and risks in the deal. Essentially, what is most important for you before handing over your money? 

What VC resources do you read? 

There are plenty of incredible thought leaders in the industry, many of whom are covered in lists like this (especially Andrew Chen, Benedict Evans, StrictlyVC, and Stratechery, to name a few). Outside of that, The Secrets of Sand Hill Road by Scott Kupor and Breaking into VC by Bradley Miles are great VC books. 

Try to read up on a bunch of different genres and topics. Recommended favorites are Crossing the Chasm (Moore), Invisible Influence (Berger), Atomic Habits (Clear), Platform Revolution (Choudary), The Culture Code (Coyle), Machine, Platform, Crowd (McAfee), and How To Create A Mind (Kurzweil). 

Those should give anyone Amazon recommendations for years on all relevant topics from better work habits to the future of AI. 

Another absolute classic is Venture Deals by Brad Feld and Jason Mendelson and if you’re looking for something with more of an academic spin, check out The Business of Venture Capital by Mahendra Ramsinghani. If you like history, Creative Capital by Spencer Ante is also a great read and gives a compelling 

background on the development of the industry. I’m also a really big fan of Shane Parrish at Farnam Street, especially his book series on Mental Models and Tom Seides podcast Capital Allocators if you want some insight into the LP perspective.

Firm-Specific Questions 

Researching the firm you’re interviewing is an essential part of the interview prep process. Read up on their culture, values, and investment strategy. Be sure to come prepared with some specific questions for the interviewer as well. 

Why our firm? How are we different from our competitors? What attracts you to this particular firm? The types of companies or sectors they invest in? Their culture or structure? Something about their reputation? There’s no right or wrong answer here. 

Which of our portolio companies are you most excited about? 

Pick a couple of their portfolio companies (ideally in a sector you’re excited and knowledgeable about) and prepare and develop an opinion on the company. What differentiates it? Who are its competitors? How fast is its market growing? How quickly are people adopting its technology? What are some potential roadblocks? Have you used the product or service? What do you think? How do you know the company (if beyond their website!). 

Which of our portolio companies would you have passed on? 

Similar to the above, but again develop a contrarian opinion. Are there potential scenarios where you think the company or market will grow slower than expected? One way to answer this question is to use a product or service that left you unimpressed but to also include suggestions on what to change (are they targeting the wrong market? Poor marketing or brand? Technology not intuitive?). Alternatively, developing a thesis on an industry that is negative and finding companies within that industry work (but of course, explain why). 

Here are a couple examples of how you may go about answering these questions: 

“I probably would have passed on BigCityTech because their target market was real estate brokers. My thoughts would have been that the increasing number of homebuyers looking online, combined with giant property aggregators pushing commissions down, would have been a huge barrier to strong rapid growth.

What I would have failed to see though was how the company was creating an entirely new business model around home selling with significant benefits to both buyers & sellers. I’d love to learn more about their go-to-market strategy and how they approached creating and scaling the business now that I can see the huge problem they’re working on.” 

The other way to answer this question is to point out a successful investment to date that you would have passed on due to different criteria: 

“One portfolio company I likely would have passed on is ABC Tech. While this has clearly been a success, at the time you made the investment, I did not see the market as being large enough to support institutional investment. However, with their ability to incorporate ancillary businesses as customers, it’s increased their market potential exponentially and given me a new way to think about estimating total addressable market size.” 

Past Experience Questions 

The interviewer may want to dive-in to some of your past roles and experience. If you have venture or investment experience, they might ask you to walk them through a deal and explain why you would/wouldn’t have gone through with it. 

During your time in your previous role, what were you responsible for? 

Broad questions like this often lead interviewees to providing long, out-of context answers. In answering these types of questions, stick to what is most relevant to the new role and if possible, pick just one or two examples if they ask and explain them in more detail (as opposed to listing a bunch with little context). Here’s an example for someone with an operations background: 

“Most of my day to day was focused on operational processes and reporting, but what I think is most relevant is my time spent developing and documenting best use practices for our CRM. I learned quite a bit about managing the sales process, creating and organizing tasks and roles, and all things that I believe any VC managing dealflow could benefit from. We measured success by common metrics such as subscriber rates and churn but also created some firm-specific stats around our target audience and quarterly goals.”

What did you like / not like about it? 

Be honest - but not too honest! For dislikes, stay away from topics regarding people (like your manager) and focus on the challenges your company faced or how your previous role(s) didn’t necessarily leverage your skills and interest. 

Always keep your answers relevant to your next role (so things that won’t be important to your job as a VC associate won’t matter in an interview either). These things can be the size of your current company, the culture, roadblocks to growth and development, or area of focus. On the positive side, what made you passionate about your work? Keep in mind that a good interviewer who hears you say lots of positive things about your current role is likely to ask why you’re leaving - so be sure you have answers to both of those questions. 

Technical Questions & Case Studies 

Technical questions and case studies are less common in venture capital interviews. Make sure you’re rock solid on the first parts of the article before moving on to preparing for technical questions. Especially if you’re short on time. Below are links to some of the best examples of case study type research within the VC community: 

1. Equity vs. convertible notes? What are the trade-offs? 

2. What are some key metrics and ratios? 

3. How would you value a pre-revenue startup? 

4. What is a cap table? Can you build one? 

5. What would you look for when evaluating a company? 

Finance Questions 

VCs need to have a clear grasp on the Finance, Accounting, and Economic terms when it comes to valuation and deal terms. Venture Capital interviews will often include tests of knowledge in this area 

How many shares outstanding of a company exist if the equity value is $10,000 and the share price is $50? 

200 Shares Outstanding ($10,000 / $50)

How do you calculate Enterprise Value if given Equity Value, Debt, and Cash? 

Enterprise Value = Equity - Cash + Debt 

Why do we subtract cash when calculating Enterprise Value? 

If we do not deduct the cash on hand, we would be double-counting it when using a cash purchase, so it is considered a discount to the purchase price. 

What is a DCF model and when would it be appropriate for valuation? 

A DCF model uses the estimated future cash flows (not earnings) of a company, including a terminal value to capture the long term estimated growth, and “discounts” those cash flows to today’s present value, summing to the value of the entity. DCF models are best used for more mature companies that have relatively predictable cash flows in the intermediate future and/or operating in new markets (with few comparables). 

What are comparables, and when would it be appropriate to use for valuation? 

Comparables are public or private market companies that are similar to the subject company (and have a valuation). VCs can use comparables to estimate a value based on the perceived differences and make adjustments for those differences to derive a value. This methodology is best used for pre cash flow companies or those that are operating in existing markets. 

What are multiples and how are they used in valuation? Multiples are calculated as the value divided by a financial metrics such as sales, EBITDA, or other. Multiples can be used to find the value of a company given an industry average and the company financial metrics and should be used for companies at similar stages or within the same industry. 

What’s the difference between pre-money and post-money valuation? 

Pre-money excludes the dollar amount of capital to be invested in the company. Post-money valuation simply includes the new invested capital.

What other methods exist for valuation besides comparables, multiples, and DCF? 

There exist many well known, including implied valuation, the VC method, the Berkus method, and various Step Up methods. 

If a company had a $500K post-money valuation and you invested $250k, how much of the company do you own?

50% given the valuation uses post-money. 

What about if the $500k were pre-money? 

About 33%, as the new valuation would be 500 + 250 / 750, and I would own 250/750 = 33% 

What are the most common startup business models and how do they monetize their product? 

The most common business models for startups are subscription-based (SaaS), commissions/fees, Freemium or Tiered, and advertising. 

Subscriptions are used for companies offering software or service platforms that benefit from the recurring nature of revenues, making them projectable and potentially more scalable. On the flip side, however, there is a substantial amount of pre-revenue work and preliminary costs incurred before these platforms can be sold, creating lots of initial risk. 

Companies that earn more traditional commissions or fees such as marketplaces or broker-based businesses (real estate buying and selling, eBay, Fintech) rely on generating transaction volume to generate revenues and therefore must be scalable and rely on network effects, which are challenging to develop. 

Freemium options work well for subscription type businesses as well as service businesses in that they allow companies to acquire initial users more easily to test ideas and develop products, but conversely face challenges in converting those users to paying customers, which often happens after initial investments and time in product development are completed - but if done well (with, for example, a compelling ‘hook’ or ability to create stickiness), results in efficient scalability because the net cost of acquiring customers declines as they convert to higher pricing tiers.

Lastly, companies that rely on advertising revenues have straightforward business models that, similar to commission-based models, rely on generating traffic and volume. However, they can be slow to get started and rely on the strength of the brand, which takes time and money to develop. 

Why do VCs measure performance using IRR instead of return percentage? 

IRR adequately demonstrates an investor’s experience incorporating the time aspect, given VC investments are illiquid, are called at different times, and are earned over the life of the fund (typically 8-10 years). IRR makes the returns comparable to other asset classes. IRR also accounts for the fact that returns can be realized over different time periods (i.e. small returns quickly or large returns over longer periods) to compare between. 

How are VC returns measured outside of IRR? In addition to IRR, which measures the return given a time period and investment amount, Total Value Paid-In (TVPI) and Distributions to Paid-In (DPI) paint a more complete picture of returns. 

TVPI measures the value of the fund’s unrealized investments (i.e. those not yet captured) plus the value of all the funds’ distributions thus far divided by the capital paid in by investors (i.e. the current value of what’s invested and paid out as a multiple of capital invested). 

DPI is the value of all distributions paid to investors divided by the capital paid in by investors (i.e. the actual earned and returned capital relative to what has been invested). Both these ratios give a sense of the returns actually earned thus far and the value of the remaining invested (and therefore yet to be realized) capital. 

VC Economics 

What is the relationship between option pools and valuation .

Option pools reduce the pre-money valuation, as the amount of outstanding options (usually 10-20% of valuation) is deducted from the pre-money valuation. To offset this, VCs and founders can negotiate the pre-money valuation so that it accounts for the option pool or add it to the post-money valuation.

What is the difference between an option and a warrant?

Warrants and stock options are similar, but warrants tend to be used for earlier stage companies but can create complexities down the road during institutional rounds, so maybe better off avoided if possible. Like options, they entitle the owner to purchase a number of shares at a predefined price for a certain number of years. 

What is vesting and why does it matter? What’s a typical vesting schedule? 

Vesting simply defers the ability for stock and options to be converted and are used to keep employees and founders incentivized to make good long term decisions. If options were able to be converted (and therefore gains realized) immediately, there is little incentive to stick around a company, for example. Options typically vest over a four year period, and ‘vest’ on a pro-rated basis (i.e. 1/48th of the value is vested each month). 

Vesting cliffs are typically one year and mean that no options vest before one year, but the 25% (first of four years) then vests immediately at that point, and the remainder begin vesting monthly. 

The other component of vesting is the trigger types. Single-trigger clauses mean options fully vest upon a merger while Double-trigger requires two events such as an acquisition and the non-retention of the employee in the new company. 

What are anti-dilution clauses? 

Anti-dilution clauses are used to protect investors when companies issue equity at lower valuations than in prior rounds (i.e. a down round) are handled in with ‘ratchet-clauses.’ 

Full-ratchets entitle the investor to reset their earlier round price at the new, lower price and are generally calculated using what is called a ‘weighted average’ approach. This concept uses the outstanding amount of prior shares and the amount of new issuances and their respective prices to calculated the weighted average price: 

New Conversion Price = (Current Common Outstanding + Common at Price with No Down-Round) / (Current Common Outstanding + Common at Price with Down-Round) x Old Conversion Price

What are liquidation preferences and why do they matter? 

Liquidation preferences state how the proceeds are distributed during a liquidity event. They are important because they can impact the final dollars received for VCs (especially when ventures are sold for less than the amount invested). The two key elements of liquidation preferences are the actual preference and the participation. 

The actual preference states what the investors are entitled to claim, which is generally a multiple of their investment and/or a pro-rata share of excess capital. The participation clauses include full, capped, or no participation: 

Full Participation: Investors receive their full liquidation preference (multiple) and additional proceeds on an as-converted basis (i.e. pro rata). Capped Participation: Similar to full but the as-converted basis are capped as some predetermined multiple. If the return is greater than the cap, the participation, however, will not apply. 

No Participation: The investor does not accrue proceeds after the liquidation preference has been fulfilled. 

What is a pay-to-play provision and when do they matter? Pay-to-play provisions matter in down rounds because it forces investors to keep participating in a pro-rata manner in future financings (in order to not have their preferred stock converted into common stock). These provisions matter most when companies, and more broadly, markets sour as it keeps investors incentivized to support their portfolio companies. 

What are Protective Provisions and to whom do they protect? 

Protective provisions are a control term within the term sheet that give the investors the right to veto actions made by the company - and therefore protect the VCs. 

What is a Drag-Along Agreement? 

Drag-along agreements curb the ability for a shareholder to vote however they want, given shareholders who are not on the board or directly involved in the company may vote in a way that benefits them solely (and not the company per se). These agreements make voting done by certain investors or class of investors.

Walk me through a hypothetical cap table and the key features. 

The cap table keeps track and summarizes the equity ownership in a company before and after the financing rounds are completed and records the owners, the class of stock owned, number of shares, the price, valuation, and ownership percentage. 

At the inception of a company, the company will be wholly-owned by the founders with a specific number of shares allocated among the team. The cap table, therefore, is used to track how this ownership changes through financing rounds. 

For example, if a company has issued 1M shares at a $5M pre-money valuation and accepts a $5M investment from a VC, the post-money valuation becomes $10M ($5M pre + $5M post). The VC, therefore, now owns 50% of the company. The cap table will track similar dilution in future rounds and the inclusion of items such as option pools (which will deduct from the founder ownership). 

To generate the updated total shares outstanding, take the existing number of shares pre-investment (2M, continued to be owned by the founders) and divide by the founder ownership percentage (50%) to generate 4M shares outstanding post-investment. 

Given the VC purchased $5M for 50% of the shares, the shares are worth $5M / (50% x $4M) = $2.50 each (purchase price divided by number of shares purchased). 

Turning the Table 

Do not take lightly the opportunity to engage in a thorough conversation throughout your interview. This should include an opportunity to ask questions yourself. Making sure the role and the firm are a good fit for you is half the equation after all! Here are some questions and ideas to think about: 

What else should I know about the role and/or firm that we have not discussed? 

Again, make sure no stone is left unturned and try to get all the information you need to feel comfortable making a decision if made an offer. Of course, you won’t be able to be 100% confident but it never hurts to ask - just avoid asking questions that you should have researched beforehand.

What companies are you most excited about within the portfolio? 

Make this personal to the interviewer. Which ones are they most interested in and why? Try to find a commonality (have you used the product, too?) over which to discuss and raise questions you might have as well to the company’s founder(s). 

What are some of the key challenges you face to continued success? 

Every company has challenges. What does the team feel is their biggest weakness and what are they doing to turn these into a strength? This, of course, is a balancing act when asking these types of questions, so avoid making assumptions and suggestions if you’re not well versed in the issues at hand. 

Have you considered expanding beyond the verticals, stages, or other specifics to expand deal-flow? While VC firms will often say they leverage expertise in specific industries, geographies, etc. it is fair to ask if they are considering new areas to open up new opportunities. What would that entail? 

What is a non-obvious competitive advantage you feel the team has at its disposal? 

Be sure, before asking this question, you have researched the company well so this question doesn’t sound like you don’t know what is likely on their company website. The truth, however, is that few VCs make the type of returns to satisfy investors, so what does that competitive advantage look like and how do they intend to keep it? 

Reflecting & Learning Post Interview 

Take a few moments to reflect after each interview or call? Getting feedback (from yourself & otherwise) is one of the best ways you can improve. What went well? What didn’t go well? Did you feel confident or nervous in certain parts? If you can ask your interviewer for feedback, but approach it critically as they may not have time to provide specifics. Ask yourself if it appears genuine? 

Collect it all together and think about how you can do better next time.

Interested in the full research paper?

You might also like, six top reason's why junior vcs quit their job, surviving the startup gauntlet: lessons in failure and success, 18 questions every vc should ask a founder during an introductory call, supporting founders, shaping industries: worklife ventures' strategic investments, 90 essential venture capital terms: a comprehensive glossary, the expanding role of venture capital: beyond funding to ecosystem building, about goingvc.

GoingVC is built around the idea of making venture capital education, investing, networks, and talent more accessible to those with the desire to succeed.

VC Interviews 101: Case Studies Unpacked

Part 2 of 4 on everything we've learned from interviewing for Venture Capital positions at top funds! 

In this episode Francesca Baillieu and Tunde Adekeye discuss the case studies and technical questions that often come up in the middle of the interview process. There are few resources that let candidates know what to expect, and even fewer unpacking what the interviewers are looking for - this episode looks to address that! We cover as much as we can, including the criteria VC funds use to assess companies, common metrics and industry benchmarks, and how to make a case for a founder. 

Resources from this episode:

Point Nine - Triple 2x Double 3x

Point Nine - What does it take to raise capital, in SaaS, in 2019?

Tunde's blog and Case Study examples 

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How to Get into Venture Capital: Venture Capital Recruiting

If you're new here, please click here to get my FREE 57-page investment banking recruiting guide - plus, get weekly updates so that you can break into investment banking . Thanks for visiting!

Everyone usually has the same first question about how to get into venture capital :

“ How do I break in?!! Tell me! ”

To students, engineers, jaded investment bankers, and Uber/Lyft drivers, venture capital sounds like the dream job: take meetings with exciting entrepreneurs all day and then bet money on the best ones.

Wait about a decade, and then… boom! You’re wealthy.

Or, if things don’t go as planned, tell your firm’s investors “it will take more time” to get results.

What could go wrong?

And, going back to that first question, how do you break into this “dream job”?

After the Interview(s): What to Expect

What is venture capital.

Venture capital firms raise capital from Limited Partners, such as pension funds, endowments, and family offices, and then invest in early-stage, high-growth-potential companies in exchange for equity (i.e., ownership in those companies).

Then, they aim to grow these companies and eventually exit via acquisitions or initial public offerings (IPOs) .

Most of these high-growth-potential companies are in technology and healthcare , but some VCs also invest in cleantech, retail, education, and other industries.

Since the risks are so high, VCs expect the majority of their investments to fail.

But if they find the next Google, Facebook, or Uber, they could earn exceptional overall returns even if 90% of their portfolio companies fail.

Here’s some data on U.S. venture returns over 10 years assembled by Correlation Ventures :

Yes, you’re reading this graph correctly: a full 65% of VC deals lose money or merely break even.

Technically, venture capital is an “investing” or “buy-side” role.

But it’s also a sales profession where you compete for capital and access to the best startups.

There’s so much capital chasing so few truly promising startups that gaining access is often the biggest challenge – which is why returns are highly concentrated among the top few VC firms.

Why Venture Capital?

Venture capital is a “get rich slowly” job where the potential upside lies decades into the future.

Annual compensation is a significant discount to private equity compensation or investment banker salaries , so if “becoming wealthy ASAP” is your main life goal, cross venture capital off your list of possible careers.

Junior-level venture capital jobs rarely lead to Partner-track positions, so you will probably not work your way up into a senior role if you join after ~2 years of banking or consulting.

Deals are simpler than in IB or PE, there’s less financial modeling and number crunching, and you spend more time on “sourcing” (finding companies) and industry research.

So, there’s only one great reason to aim for junior-level VC roles: because you are extremely passionate about startups and you want to use the role to learn, build a network, and leverage it to win other startup-related roles in the future.

Fore more on this topic, please see our article on venture capital careers .

How to Get Into Venture Capital: Who Wins Interviews and Offers?

The three main entry points into venture capital are:

• Pre-MBA: You graduated from university and then worked in investment banking , management consulting , or business development, sales, or product management at a startup for a few years.
• Post-MBA: You did something to gain a background in tech, healthcare, or finance for a few years before business school (e.g., engineering or sales at an enterprise software company), and then you went to a top business school.
• Senior Level / Operating Partner: You successfully founded and exited a startup, or you were a high-level executive (VP or C-level) at a large company that operates in an industry of interest to VCs.

We focus on the pre-MBA path here since you’re most likely in that category, but most of the tips here are relevant to the post-MBA path as well.

It’s very difficult to break into venture capital directly out of undergrad, and even if you have the background for it – i.e., you went to Stanford or Berkeley, majored in CS, and completed multiple startup and finance internships – it’s not necessarily a great idea to do it.

To be useful to a VC firm, you need some full-time, real-world experience and at least the beginnings of a professional network.

Venture capital internships during undergrad are more plausible and are often a useful way to win investment banking roles later on.

It also tends to be difficult to move directly from a pure engineering role into VC because market and customer analysis matter more than coding prowess or technical skills.

Yes, we’ve featured readers who have done it, but it’s quite rare.

Management consultants may have a bit of an advantage over bankers, but it depends on their background: advising on HR policies for insurance firms is far less relevant than advising on strategy for tech companies.

Overall, pedigree and prestige still matter quite a bit for VC roles, and firms tend to favor candidates with brand-name firms and universities on their resumes.

How to Get Into Life Science Venture Capital: The Exception That Proves the Rule

One final note: life science venture capital (biotech, pharmaceuticals, medical devices, etc.) is different from tech venture capital, and at early-stage life science VC funds, academic prowess counts for a lot.

They often recruit Ph.D.’s from top institutions who are specialists in an area of interest for the firm, and they don’t necessarily require banking or consulting experience or an MBA to get in.

However , you still need some business/finance knowledge, normally gained by starting your own business, taking courses, or completing relevant internships.

Also, they want advanced scientific knowledge: an undergraduate or Master’s degree in biology is not sufficient unless you have other, highly relevant experience, such as founding a biotech startup or working in healthcare investment banking or biotech equity research .

Late-stage life science VC funds tend to care more about finance experience, so if you’re more of a finance person with some knowledge of science, late-stage funds might be a better fit.

What Qualities Do Venture Capitalists Seek in Recruits?

Junior-level VC roles (“Associates”) differ based on the firm’s investing stage, industry focus, and strategy:

• Investing Stage: Early stage? Late stage? Closer to growth equity ?
• Industry Focus: Technology? Life sciences? Cleantech? A specific sector within one of those? Something else?
• Strategy: Does the firm spend more time on portfolio company operations, finding new investments, doing industry research, or something else? Does it find new investments via outbound marketing, referrals, or a more data-driven approach?

VCs prefer to recruit presentable, highly articulate professionals with a passion for startups over number crunchers with limited interest in startups.

This is especially the case at early-stage firms, which focus on sourcing, building networks, and setting up meetings to win deals and raise capital.

At late-stage firms, deal execution and due diligence become more important, but even there, the analysis is fairly simple compared with the average IB/PE deal.

Venture capitalists want professionals who hold strong views on different industries and companies and who can justify their views based on market and customer analysis , not the product/technical details (maybe not as true in life sciences).

If you’re more of a finance person or number cruncher, then you should focus on late-stage firms or growth equity firms.

How to Get Into Venture Capital: The Full Recruiting Process

There are not that many junior-level VC jobs, and the available jobs tend to be concentrated in specific regions, such as the coasts of the U.S.

It’s difficult to win these roles because:

• Similar to other buy-side roles, VCs do not “need” an army of junior employees to churn endless documents to close deals.
• VC firms are flat partnerships with fixed budgets based on assets under management (AUM) , so each new hire directly reduces the earnings of the Partners. Closing deals does not result in more revenue or a higher budget in the near term.
• Demand far exceeds supply because everyone thinks venture capital “sounds cool,” without necessarily understanding the job in detail.

As a result of these factors, the venture capital recruiting process is unstructured and similar to the off-cycle private equity recruiting process .

Some of the bigger firms, like Sequoia, New Enterprise Associates, and Accel, may use headhunters, and the list of names is familiar: in the U.S., CPI, Oxbridge, and Glocap tend to have a steady stream of roles.

In Europe, KEA Consultants and PE Recruitment (PER) offer many VC roles.

Unlike in private equity recruitment , these headhunters will not necessarily contact you proactively years before the job start date.

You’ll have to be more proactive with getting referrals, contacting them, and asking specifically about venture capital – or, you can do the networking yourself and go around headhunters.

You should start by narrowing down the types of funds you want to work at, searching for professionals on LinkedIn, and then emailing them to ask for advice on getting into VC.

You can follow the example email templates on this site or in articles such as the one on middle-market private equity recruiting .

As always, asking for advice about getting into the industry tends to be more effective than asking directly for a job.

The recruiting process can drag on for months if the firm has no urgent hiring needs, or it can be over quickly – in a month or less – if they need to replace someone right away.

You’ll start with phone interviews, but you should expect to meet everyone at the firm, or everyone in the group at the large firms, multiple times before winning an offer.

Interviews are casual and conversational, and VC interviewers put a laser focus on “fit.”

Case studies and short modeling tests are possible, but they’re far less likely than in private equity interviews (where they’re guaranteed to come up).

Venture Capital Interview Questions and Answers

Venture capital interviewers ask questions that are similar to ones you’d receive in corporate development, investment banking, or private equity interviews…

…but the focus and distribution of the questions are far different.

Unlike in investment banking interviews , you won’t be quizzed for 30 minutes on the WACC formula or Equity Value vs. Enterprise Value or the tax treatment of defined-benefit pension obligations.

Technical questions could still come up, but VCs care far more about your market views and investment ideas and your fit with their team.

So, in rough order of importance, here are the question categories you can expect:

• “Fit” and Background Questions – Your resume, why venture capital, why this firm, your strengths and weaknesses, etc.
• Market and Investment Questions – Which startup would you invest in? Which market is attractive? Which markets should we avoid?
• Firm-Specific and Process Questions – What do you think about our portfolio? Which companies would you have invested in or not invested in? How would you analyze a potential investment and make a decision?
• Deal, Client, and Fundraising Experience Questions – How did you add value in the IB deals you’ve worked on? If you worked at a startup, how did you win more customers or partners in a sales or BD role?
• Technical Questions – You could get standard questions about accounting and valuation, as well as VC-specific questions about cap tables , key metrics in your industry, and how to value startups and size markets (e.g., average revenue per user , SaaS accounting , annual recurring revenue , SAFE Notes , venture debt , etc.).
• Formal Case Studies and Modeling Tests – These are less likely, but you could get a short investment recommendation or a market/company analysis.

We cover sample venture capital interview questions in this separate article and provide examples and model answers as well.

If you hear back within a day or two, it’s almost always good news.

If not, follow up every week or two until you get some answer, even if it’s “Sorry, we’re delayed and we don’t know yet.”

If the VC firm is not under pressure to replace someone who suddenly left, it can be a very long process to finish interviews and get an answer.

How to Get Into Venture Capital: Is It Right for You?

Before jumping into the recruiting process, you need to spend time asking yourself whether or not you truly want to be in VC.

If you go into interviews without much conviction, it will be very apparent that it’s your “Plan B” after private equity and hedge funds didn’t work out.

You don’t need to memorize hundreds of pages of technical questions or be an Excel/VBA wizard or be a programming demigod to get into VC….

…but you do need an extreme passion for startups, which you can’t “learn” by reading interview guides.

How to Get Into Venture Capital : For Further Learning

If you want to learn more about venture capital and stay apprised of industry trends, I recommend:

• The Venture Capital Case Study: What to Expect and How to Survive
• Venture Capital Interview Questions: What to Expect and How to Prepare
• How to Start a Venture Capital Firm – and Why You Probably Shouldn’t
• Brad Feld’s books on Venture Capital (especially Venture Deals )
• StrictlyVC – Daily VC-related newsletters
• PitchBook’s VC News
• Private Equity vs. Venture Capital : What’s The Difference?

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

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41 thoughts on “ How to Get into Venture Capital: Venture Capital Recruiting ”

Hi Brian, thanks for the article. I work in venture capital at a mid level position in Australia – do you have a view on how hard it would be to move to another country (Europe or US), and recruit for VC roles? Or do you think transitioning in tech / startups would be more likely? Thanks!

I think it would be quite difficult to do this due to work visa issues. VC firms are small and really do not like to sponsor people, especially in places like the U.S. where the process is notoriously random and time-consuming. You would have a better chance of doing this if you could find a job at a large/global tech company and then push for a transfer via that company.

Thanks Brian. And if visa was not an issue and I was targeting the European market, would it be correct to assume that Europeans VCs would be less interested in a mid level hire from a different geography, since I would cost more than analysts / associates, and not immediately have a local network? Thank you very much for your help.

Yes, those are both issues as well. VC is hyper-localized, and at the mid-levels, you’re not quite as “plug and play” as Analyst/Associate candidates, so it’s a tougher sell. You probably still do have a higher chance if you aim for European VCs, but it would still be a challenge to move directly.

Hey Brian, I’ve been doing Business Valuations in Asia for a couple of years, and just got two offers – (1) one at a Technology Investment Bank (USD 50m – USD 500m deal size), and (2) the other being a mid-level Corporate Development type role at a VC-backed start-up (in an industry that would be of interest to VCs). You mentioned that a high-level role at a startup is what it might take to get onto a partner track in VC, so does that mean that grinding it out at (2) for a couple of years makes more sense if my end goal is VC? And in general, which of the two do you think would open up more options? Appreciate the advice!

#1 gives you more options overall, but #2 might be better if your specific goal is venture capital. But I don’t think #2 provides a huge benefit for VC roles over a tech IB role, as many tech bankers go into VC anyway. I don’t really think they would bring you in at a senior level in VC unless you are a C-level executive at this company, and it performs very well. So… it depends on whether you’re most interested in VC or could see yourself in other roles, and also the level you’ll be entering IB at. If they’re going to make you a Year 1 Analyst, you might just want to skip all the nonsense and go to Corp Dev for more interesting work and a better lifestyle.

Great advice Brian. Wrestled with the exit options bit, but decided to skip the nonsense and go with Corp Dev, thanks!

Thanks. Good luck!

I currently work in equity sales, first at a big IB for many years and now at a smaller broker. I found a role at a multi-stage VC firm that I am incredibly interested in (impact investing). I have experience with the relationship aspects of the role they are hiring for, but less so the startup experience and investment process knowledge.

Do you have any advice on how I might ‘break in’ to this role or write a cover letter that could position me well enough to get a first interview? I am passionate about impact investing and come from a family of entrepreneurs (having initiated investor conversations for my own company in the past), but have no direct work experience in VC.

Not really, the usual networking strategies and tactics apply. Reach out via LinkedIn/email, say you found the position, explain your family entrepreneurship background + sales experience and how that makes you a good candidate, and ask if they can tell you anything more about the role. Direct VC work experience doesn’t necessarily matter that much.

I’m in the UK

I’m 5 months into my full time Transaction Services / FDD role at a Big4 firm (in the TMT team in London) but I’ve been offered a financial analyst position at an extremely fast growing FinTech startup

My plan at the Big4 was to switch to Banking after 3 years (chartered qualification) and then maybe VC after – or maybe go straight into VC after my chartered qualification

Do you think there’s the possibility in working at a start-up in a finance capacity then making the switch to VC (the start-up will also support my Chartered accountancy) I feel as if the Big4 path is very well defined and I know what’s to come

But the start-up route would lead to a bigger network and faster growth through more responsibility?

Would like to hear your thoughts

Thanks in advance :)

It will be very difficult to go from the startup back into IB if you’re at all considering that. VC will be easier, but still not a sure thing because the roles are still different (reporting/budgeting vs. investing). It also depends on how big the startup currently is. You generally want companies with between 20 and 100 million or so in revenue, as there’s too much risk associated with ones smaller than that.

Thanks alot – much appreciated!

I noticed you’ve just uploaded an article on the London PE industry

Would be good to see something similar for London VC

This is a very informative article on VC and inspired me even more to get into VC. I am currently working as a product manager at an early-stage startup backed by an angel investor and I am looking for transition into VC. Need some guideposts on how much experience should I hold before applying ? How to research for such openings? and what skills should I be developing within product management landscape that will further by chances for landing an opportunity at VC

My advice is to read this article and follow the tips here: https://mergersandinquisitions.com/engineer-to-venture-capital/

https://mattturck.com/playing-fake-vc-or-the-portfolio-approach-to-getting-a-job-in-venture-capital-2/

Hi Brian – I found your brief on VC immensely informative. I am in product management at a big tech company and would like to move to a top VC firm. I need a great VC coach. Do you recommend any or can your suggest effective ways to find one?

Thank you, John

I don’t know of any VC coaches, sorry. Maybe look on Upwork and see if someone with VC experience there can help you.

I am also a product manager at a tech startup backed by an angel investor in India. Let’s connect over a Linkedin as I am also looking to move towards VC firms.

Here is my Linkedin Profile —> https://www.linkedin.com/in/rohankhollamkar/

Hi John, You can find me Here —> /in/rohankhollamkar/

Will working in venture capital or growth equity be useful for going into entrepreneurship? Is there a better one out of the two for this?

Not really sure how the financial analysis skills can really translate when setting up a business.

No, not really. There may be a marginal benefit because you’ll get to know more entrepreneurs and investors and you may get access to a batter talent pool, but the roles are not at all similar. The biggest difference is that starting a business is all about *doing things quickly* to generate sales. Fields like VC and growth equity are more about talking, evaluating, analyzing, etc., and waiting for things to happen rather than making them happen.

You mentioned it in the article but didn’t dive as deep into it. I was wondering how useful you think corporate strategy, development, or finance roles for making a move into VC? Also was wondering what these types of roles would be called at startups since the titles are a bit more blurred. For example would they fall under business development?

Those roles can work, but they’re probably not as good as IB or consulting for entry-level VC jobs. At startups, yes, many of these roles fall under “business development” or “operations” or something similar.

You’ve covered the topic of Big4 Audit to Big4 TAS to IB/PE before, but I am looking into VC. Is Big4 Audit to Big4 TAS to VC a viable path? Is it easier/harder than just going into IB/PE? Or would I need an IB steppingstone role before trying for VC roles?

I don’t think it’s a particularly common path because Big 4 TAS is perceived as being further away from VC than IB/PE roles. Yes, you work on deals, but you spend your time on tasks the VCs tend to care less about (deep financial due diligence, not market DD). For VC roles, it’s almost always better to work in IB, consulting, or join a startup in a sales/operations/business development role first.

Thanks Brian.

If I could move into growth equity after Big 4 TAS, would I be able to ‘lateral’ into VC after a year or so in growth equity?

Yes, potentially, but moving from Big 4 TAS into growth equity also isn’t an easy transition.

Hi Brian, thanks for this article. I found it very insightful. I am currently an undergraduate student in my second year (non-target university). I am doing my first ever internship at a family office VC fund focused on digital health investments. In your opinion, to what degree does it give me an edge over other students when applying for other internships later on (Management consulting, IB, PE)? How can I best leverage it this experience? And should I aim for “healthcare” PE funds and IB to give me more chance of getting the offer as it will be related to my VC experience? (Taking into consideration the fact that I am not passionate about this industry)

It helps, but it doesn’t really give you an “edge” over roles like consulting, IB, PE, etc. There are some tips on how to use VC experience here: https://mergersandinquisitions.com/venture-capital-to-investment-banking/

If your ultimate goal is PE, then you should probably aim for IB roles first because you will have much better opportunities after working in IB. So maybe target healthcare groups at banks and then go from there.

I’m in banking at Goldman Sachs NY (2nd year analyst) and would like to get into VC (in either NY or CA). I have found it very difficult to focus on networking / prepare for the interview process with my hours (largely working until 1-3am, 6-7 days a week as you may know).

Is it looked down upon to quit my current role, and take time to solely focus on VC recruiting? Further, given the VC recruiting process can be quite long, in your opinion is it worth the risk of being potentially unemployed for an extended period?

The tradeoff is I either try to interview while in my current role– recognizing I likely won’t interview / network as well given my hours or I quit allowing for full focus– recognizing I may be in a “gap” / unemployed for an extended period as I pursue VC.

Would greatly appreciate your thoughts. I am very unhappy with my current state and on the verge of quitting so I would like an outside view here.

It is generally not a good idea to quit your current role and then recruit because quitting always sends a negative signal. But this is more of an issue if you want to move to another large bank or go to a PE firm or hedge fund.

If you’re 100% certain you want to recruit for VC roles, and you simply don’t have time to prepare for recruiting right now, then yes, it may be a good idea to quit. VCs care less about how long you were officially there, resume gaps, etc., as long as you have some explanation.

It will probably be more difficult to win offers at the top VC firms if you do that, but coming from GS NY, you could easily win offers at other firms.

Hi Brian, I’m planning to apply for an IB internship 2 years from now and would just like to ask what I should pursue for my immediate internship; boutique PE or VC firm? Which do you think would be more attractive as an IB applicant in the future?

Either one could work, but VC internships give you some advantages that are described in this article: https://mergersandinquisitions.com/venture-capital-to-investment-banking/

Thoughts on Corporate Venture Capital?

It’s… OK? We covered it before here: https://mergersandinquisitions.com/corporate-venture-capital-jobs/

It’s a blend of corporate development and venture capital, and it has the same trade-offs as both of them.

Hey Brian, currently doing Valuations for a year and I’m interested in both tech ib and vc. Interviewing with a vc firm right now and I’m moving on to round 2, which I heard is a case? Any idea what it could be?

Also, I found out the comp is 60k with potential for performance bonus in a very high cost of living city. Does vc have potential for career growth and income growth or am I better off going into tech ib?

It will probably be a “Should we invest in this company? Why/why not?”-type case where you focus on market and competitive analysis. They could ask for a simple projection model as well.

$60K for total compensation sounds ridiculously low for a high-cost city. At that level, you’re much better off going into tech IB because even the base salary is significantly higher than $60K.

Is the Partner title different than that of banks? I look at some top name VC funds and it seems that some people go from tmt ib analyst straight to partner? I look through LinkedIn and I see a bunch of partners. Am I missing something?

For example I see on LinkedIn 1 yr at tmt for IB Analyst, then 2 years partnership at a top vc fund.

Yes, sometimes VC funds play games with titles and call everyone at the firm “Partners” even if they’re junior-level hires. However, they are not real Partners in the sense of owning a stake in the firm and receiving carry, or a higher portion of carry, on deals. a16z likes to do this. “General Partner” means the person is an actual Partner/senior-level person at the firm, while “Partner” after a year of IB just means “junior-level hire whom we’re making sound more important.”

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Venture Capital Interview Questions: The Full Guide

By Victoria Collin |

 Reviewed By Rebecca Baldridge |

June 10, 2024

Securing a role within the highly competitive Venture Capital industry is a challenging endeavor. The interview process for VC analyst and associate positions is designed to thoroughly evaluate candidates across a wide range of skills and knowledge areas. This can range from testing investment acumen and analytical abilities to assessing a candidate’s fit within the firm’s culture.

In this comprehensive guide, we will dive deep into the key components of Venture Capital interviews, providing you with the insights and strategies you need to achieve your goal. Whether you’re a recent graduate or an experienced professional, this guide will equip you with the tools to navigate the process with confidence and position yourself as a standout candidate in a competitive marketplace.

The Structure of a Venture Capital Interview:

Fit and Background Questions The interview typically begins with questions aimed at understanding your background, motivations, and alignment with the Venture Capital industry. Expect inquiries about your resume, interest in Venture Capital, firm preferences, and self-assessment of your strengths and weaknesses.

Market and Investment Questions A significant portion of the interview will likely focus on assessing your ability to evaluate investment opportunities and your understanding of market dynamics. These questions are less technical but require critical thinking, research, and the ability to articulate your insights clearly.

Firm-Specific and Process Questions Interviewers will want to test your knowledge of the Venture Capital firm, including its portfolio, and decision-making processes. Be prepared to discuss the firm’s current investments, your investment preferences, and how you would approach due diligence .

Deal, Client, and Fundraising Experience Questions These questions explore your past experiences related to deals, client interactions, and fundraising efforts. Interviewers will want to understand how if you have any experience of adding value in these areas and how you approach challenging situations. If you have limited experience, it is best to be honest as interviewers will be able to spot this.

Technical Questions While less common for analyst roles, you may encounter technical questions related to accounting, valuation, or industry-specific metrics. Be prepared to discuss topics such as valuation methods, startup metrics, and financial modeling techniques, particularly if you have a degree or experience in this field already.

Case Studies and Modeling Tests Some firms may incorporate case studies or modeling exercises to evaluate your analytical abilities in dynamic situations in a lifelike situation. These could involve analyzing investment scenarios, market analyses, or cap table exercises.

Background & Behavioral Questions

• Why do you want to work in Venture Capital? Why right now?
• Where do you want to be in five-years’ time career wise?
• What do you consider to be your biggest strengths?
• Can you describe a significant challenge that you have faced and how you overcame it?
• What differentiates our firm from other VC firms?
• Can you discuss a recent deal that you found particularly interesting and why?
• How would you value a company?
• What are some current industry trends?
• Describe a process for evaluating potential investments.
• How do you assess the risk associated with a particular investment opportunity?
• Explain how you would go about conducting due diligence on an investment target.
• What strategies would you use to identify promising startups or emerging markets ?
• Are you familiar with financial modeling techniques used in Venture Capital?
• Tell me about a time when you had to make a difficult decision regarding an investment.
• What criteria would you consider when deciding whether or not to invest in a company?
• How do you stay informed about industry trends and developments that could affect your investments?
• What is your experience with negotiating terms of an investment deal?
• Describe your approach to portfolio management and monitoring investments over time.

Questions based on Previous Experience

• What experience do you have in Venture Capital and Private Equity?
• What strategies would you use to build relationships with entrepreneurs and other investors?
• How would you handle conflicts between different stakeholders in an investment?
• What are the most important metrics you look at when assessing the performance of an investment?
• Do you have any experience working with angel investors or venture capitalists?
• What strategies would you use to ensure that all parties involved in an investment understand their roles and responsibilities?
• Have you ever been part of a successful exit strategy? If so, what was your role?
• What challenges have you faced while managing a Venture Capital fund?
• How do you evaluate the impact of macroeconomic factors on Venture Capital investments?
• Describe any experience you may have had with developing and implementing investor relations strategies.

Market and Investment Questions

• What are your thoughts regarding the current IPO, M&A, and VC funding markets – what are the current key issues in your opinion?
• Which start-up would you invest in today? Can you explain why?
• Which market or sector do you feel is attractive at the moment?
• Which markets or sectors would you suggest that investors should avoid?
• How would you value a start-up? What are the important considerations, particularly with early-stage ventures?
• What key metrics matter most in the tech industry?

Venture Capital Interview Questions: Technical Concepts

You are very unlikely to be asked traditional IB interview questions in VC interviews, as questions will more likely focus on VC-specific topics. This will likely include questions regarding different types of funding, startup metrics, and so on. The Venture Capital Associate online course covers the core concepts and practical skills in venture capital, start-up valuation methods, and forecast models used in the industry to help stand out in your interview and prepare you for your role.

• What’s the difference between pre-money and post-money valuations?
• Why would a startup raise money in a priced equity round vs. a SAFE note a convertible note?
• What are some key metrics and ratios for analyzing SaaS companies ?
• How would you value a biotech startup? What method and metrics do you think would be most effective?

Case Studies

Venture Capital case study interviews are designed to assess a candidate’s analytical, problem-solving, and communication skills. Interviewers will often present a business case related to the industry or market, and expect candidates to analyze the problem, evaluate potential solutions, and develop a coherent and persuasive argument.

Candidates should be prepared to follow a structured approach to tackle the case study. This may include frameworks like the “Issue-Tree” method, which involves breaking down the problem into smaller components, identifying causes, developing hypotheses, gathering relevant data, and deriving conclusions.

Interviewers may expect candidates to demonstrate their ability to:

• Understand the problem and its context thoroughly
• Analyze data and support analysis with credible information and logical reasoning
• Identify key issues, challenges, and opportunities related to the case
• Develop and present a clear, well-structured solution or investment recommendation
• Communicate a well-thought-out process and deliver findings in a clear, concise, and persuasive manner
• Handle follow-up questions and be prepared to defend their assumptions, methodology and conclusions
• Market sizing: Estimating the size of a market or industry based on available data points.
• Financial projections: Creating financial models to project a startup’s revenue, expenses, and cash flow.
• Valuation: Determining the value of a startup based on its financial performance, market opportunity, and competitive landscape.
• Investment thesis: Developing an investment thesis for a particular market segment or product category and defending the strategy with relevant data points.

Example Case Study Questions

Market sizing.

• Estimate the total addressable market for electric vehicle charging stations in the United States over the next 5 years.

Financial Projections

• A food delivery startup has provided the following data: $5 million in seed funding, 20% month-over-month revenue growth, $2 million annual marketing spend, and 15% cost of revenue. Create a 3-year financial model projecting its revenues, costs, and cash position.
• Company X is a Software startup with $10 million in annual recurring revenue growing at 75% year-over-year. Its biggest competitor was just acquired for 15x revenue. How would you value Company X?

Investment Thesis

• Develop an investment thesis for Consumer Healthcare wearables. What factors would make a startup in this space an attractive investment opportunity? Support your rationale with industry data and trends.

Business Strategy

• A ridesharing startup is considering expanding into food and grocery delivery. Analyze the potential risks and opportunities of this strategic move. How might it impact the valuation and competitive positioning?

These examples cover various aspects like market sizing, financial modeling, valuation methodologies, investment thesis development, and strategic decision-making that venture capitalists will encounter regularly. Practicing similar cases will help candidates demonstrate their analytical abilities and venture capital knowledge.

Deal Experience Questions

• How did you add value to the deals you’ve worked on?
• Describe a situation where you had to resolve a conflict within a team during a deal process.
• What challenges have you faced in due diligence processes, and how did you overcome them?

Client Interaction Questions

• If you worked at a startup, how did you win more customers or partners in a sales or business development role?
• How do you handle client objections or pushback during negotiations?

Fundraising Experience Questions

• Have you been involved in fundraising efforts? How did you contribute?
• What strategies have you used to successfully raise capital for a company?

Preparation Strategies

By following these strategies and thoroughly preparing for each component of the VC interview process, you’ll increase your chances of securing your dream role at a top-tier Venture Capital firm.

Research the Firm

Start by thoroughly researching the VC firm you’re interviewing with. Understand its investment focus, ethos, portfolio companies, and recent activities. This will enable you to tailor responses and demonstrate your alignment with the firm’s goals.

Stay Current on Industry Trends

Stay informed about emerging trends, developments, and market dynamics that could impact the venture capital industry. Subscribe to respected VC blogs, follow thought leaders on social media, and attend industry events to help deepen your knowledge.

Practice Case Studies

Familiarize yourself with the case study format and practice analyzing business cases. Develop structured approaches, such as the “Issue-Tree” method, to break down complex problems and present coherent solutions.

Brush Up on Technical Concepts

While technical questions may be less common for analyst roles, it’s essential to have a solid understanding of key concepts like valuation methodologies, startup metrics, and financial modeling techniques.

Refine Your Communication Skills

VC interviews place a strong emphasis on your ability to communicate complex ideas clearly and persuasively. Practice presenting your analyses and recommendations in a structured, concise manner.

The path to a successful Venture Capital career begins with acing the interview process. This guide has provided you with a comprehensive overview of the key components of VC interviews, along with preparation strategies and sample questions to help you navigate the process with confidence. Remember, the interview is not just an opportunity for the firm to assess your fit; it’s also a chance for you to demonstrate your passion, expertise, and potential to contribute to the world of Venture Capital. With the right mindset, preparation, and dedication, you can position yourself as a standout candidate and take the first step towards an exciting and rewarding career in this dynamic industry.

If you’re looking to start a career in venture capital, enroll on the  venture capital course to master the practical skills needed to succeed as an associate at a VC fund. Learn th core concepts of venture capital, start-up valuation methods, as well forecast models used in the industry.

Additional Resources

Venture Capital

Venture Capital Analyst

Venture Capital Course

Private Equity vs Venture Capital

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The 50 Most Common Venture Capital (VC) Interview Questions

An overview of the top VC interview questions to help you prepare for the competitive venture capital hiring process as well as a breakdown of the application structure.

Posted March 12, 2024

Table of Contents

Venture capital is an often sought-after industry and one which few are actually able to break into. It’s incredibly competitive due to its high levels of competition and interesting work.

Like investment banking and other financial industries, the interviews are often divided into behavioral and technical. Below, we’ll review what interviewing looks like at a VC firm and then provide you with 50 of the most common questions for both types of interviews.

The Venture Capital Interview Process

There is no definitive format for a VC job interview because every firm has its own style; however, there are some foundational principles that underlie most interviews. Keep in mind that before going into an interview, you should understand the startup ecosystem, the technology and trends in your target industry, the case study methodology, and your reasons for trying to get into venture capital.

There are generally at least these three steps in the interview process of a venture capital firm.

1. Intro Call

First, a preliminary call is scheduled so the candidate can meet the hiring manager and test the basic fit, and the manager can pitch the role. It’s an open conversation meant to see whether the candidate could work well with the team, why they’re interested in the firm, and how qualitatively well their personality and experiences would integrate.

VC firms tend to require a basic level of technical or operational knowledge and also like to see applicants who can personally relate to the founders and culture. They are expected to have energy and enthusiasm as well as a broad range of interests across the spaces that the firm covers. Even in the intro call, applicants may be asked a few case study questions related to the market/industry or investments.

2. Pitch Deck Review

If the candidate seems to be the right fit, they’ll move on to the next round: an analytical pitch deck review session. They will be required to review several pitch decks and walk through their thoughts on them. The interviewers are looking for a high-level, thoughtful, and succinct articulation of each company and its market.

In this round, the interviewer is looking for a variety of things, including if the candidate understands how easy or challenging a given business model will be to scale and if they’re able to ask insightful and necessary questions, among others.

This step is critical because, at the end of the day, the best founders choose their investors. If the candidate is able to quickly understand where there is a lack of information and ask perceptive questions, they’ll be able to build immediate rapport with the people they may ultimately end up working with.

3. Meet the team and references

The final step is very straightforward. The candidate will meet the rest of the team and get to know them personally. At this point, it’s less evaluation and more company and culture fit analysis and discussions on salary requirements. The hiring managers will communicate expectations and make sure that everyone is aligned with the applicant.

The Best 50+ Free Resources to Break Into Venture Capital

We've compiled the most comprehensive list of all the best resources to help you land a job in the competitive world in VC.

50 Interview Questions for Breaking Into Venture Capital

With that, let’s jump into some of the questions you’ll be asked throughout the interview process. The most important things to remember are that you should be able to clearly articulate why you want to join the VC industry overall and the firm in particular, and have knowledge of the markets and industries in which the firm works.

• Tell me about yourself/walk me through your resume.
• Why did you choose to do [insert past role]?
• Tell me about [an experience on your resume]. What were your responsibilities/achievements? What did you learn? Why did you leave?
• What are your biggest strengths and weaknesses?
• Where do you see yourself in five to ten years?
• Where do you see your career in five years? What are your top career goals?
• What is your long-term professional goal?
• What are you most proud of?
• What are your biggest failures? How did you overcome them?
• Tell me about a time when you… (showed leadership, overcame a challenge, resolved a disagreement, convinced someone of something, changed the trajectory of a project, etc…).
• What’s your superpower?
• What drives you to improve yourself?
• What are some of your hobbies? What do you do in your free time?
• How would you describe yourself? How would a friend describe you?
• What do you believe that most people don’t?
• Why are you interested in this role? At this firm?
• Why are you looking to leave your current job?
• What do you bring to the firm? Why would you succeed in this role?
• In what areas do you think someone in this role spends the majority of their time?
• Why do you think that you would make a good VC even with… (three objections they may have about your background/candidacy)?
• Why not private equity, entrepreneurship, or a startup?
• Do you have any questions for us?
• What sectors are you most interested in and why?
• What companies most excite you right now?
• What blogs/articles/publications do you read? What podcasts do you listen to?
• What has been the most interesting acquisition or IPO in our industry in the past one or two years?
• What are your thoughts on the IPO market at the moment? Is there a bubble? Is this a problem for venture capitalists?
• Are there any investments of ours that you like and why? Which has the biggest potential among these portfolio companies? Which one do you think we shouldn’t have invested in?
• Who are our biggest competitors?
• Is there a company you think is really overvalued in the markets?
• Tell us about an exit you heard about recently.
• What are the key stages to a VC investment from beginning to end?
• If you joined tomorrow, how would you source potential investments?
• How would you assess a startup? How would you evaluate a late-stage startup versus an early-stage one?
• What steps would you take in doing your due diligence?
• What metrics would you look at when evaluating a company and why?
• How does a VC firm raise money? How does it track its performance? What are its most important KPIs?
• Do you think investors value revenue or profit more?
• What would you look for in a startup's financial statements?
• How do startups get valuations?
• What is pre-money and post-money?
• What are convertible and SAFE notes? What are the trade-offs between them?
• What terms would a VC firm negotiate with a founder?
• What different business models could [example startup] apply?
• How can a startup dominate a segment where there are there other companies doing the same thing?
• What kind of engineers should a startup hire? Experienced or young? Cheap or expensive? Local or international?
• How much time do you think [example startup] spent on patent protection between Seed and Series B?
• What have you personally invested in and why?
• How do you normally calculate the churn rate?
• Walk me through the three financial statements.

Preparing For Your VC Interview

While not exhaustive, these specific questions will give a good foundation upon which you can start to prepare thoughtful responses and practice your answers. You don’t want to come off as a robot, but you also don’t want to be stumbling through your responses.

With most interviews, applicants tend to rush through their answers. Remember that it’s supposed to be a conversation, not a race. It’s completely alright–and recommended, in fact–to take a second to think about what you want to say and then organize the thought in your head before you start to respond. You do not need to have a perfect answer prepared rapid-fire immediately after they ask the question.

Ace Your VC Interview With the Help of an Expert

The best way to prepare for interviews is live practice. At Leland, we have a whole host of world-class, vetted coaches with experience at some of the world’s top venture capital firms to work with. Do a mock interview, talk to them about your motivations, have them review your responses and resume, and anything else you need help with. Below are some of our top recommendations, but you can browse all of them here .

Interested in VC? Here are some other articles you may find interesting:

• The Best Venture Capital & Private Equity Newsletters and Podcasts to Subscribe To
• The Top 10 Venture Capital Books
• How to Get Into Venture Capital: Lessons Learned Interviewing 100+ Venture Investors
• The 10 Best Venture Capital Fellowships

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Top Venture Capital Interview Questions

Venture capital (VC) careers are competitive, with many more interested candidates than open positions. You should only consider a venture capital job after you have had many years of successful, relevant, hands-on experience.

Venture capitalist Guy Kawasaki put it best when he said that he imagines saying the following to an entrepreneur across the table: "Why would you want advice from someone whose background consists of working in a college bookstore or cranking spreadsheets at an investment bank ?"

If you have the requisite background, preparing yourself for common questions will help you shine in your venture capital job interview. Many of the questions you can expect during a VC job interview are general in nature, but others are unique to the venture capital industry. Below, we'll explore nine important industry-specific questions and how you should answer them.

$548 billion

The amount of U.S. venture capital assets under management (AUM) in 2020, a record year for the industry, according to the National Venture Capital Association (NVCA).

1. Why Do You Want a Job in Venture Capital? And, Specifically, Why Did You Want a Job With Our Firm?  

Before the interview, conduct extensive research on the firm to gain an intimate knowledge of the company and the industry that will distinguish you from other candidates. Your answer to this interview question should showcase this knowledge along with your general enthusiasm for investing in young companies (but do not mention the significant compensation associated with it).

This is your opportunity to convey your passion for early-stage company activities. If your answer focuses on a love of spreadsheets, you can forget about getting to the next stage. Instead, think of what about seedling companies gets you fired up. Project that energy and those points and you will connect with the interviewer. In addition, point out how the particular firm you're interviewing with fits into your desired career path and why your background would be ideal for this firm.

2. What Are Some Recent Developments in Our Industry?

Venture capital firms seek employees with proven expertise, often in a particular industry in which the firm focuses. You should not only showcase your knowledge of the overall developments and trends in the industry, but also elaborate on the specific influences currently affecting the market. Demonstrate knowledge that only an experienced industry insider would have. Discussing a particular company's product release or strategic decision would be a great method to do exactly that.

3. What Has Been the Most Interesting IPO or Acquisition in Our Industry in the Past Year?

This question provides ample opportunity for you to shine. Study the ins and outs of an initial public offering (IPO) that relates to the venture capital firm's niche interests and prepare your analysis. Discuss the potential you see for the company and how it could strengthen its market position. Treat this question as a test of your industry knowledge and an opportunity to impress your interviewer with thoughtful analysis.

This research will also help you later when proving to clients you understand their field and where they can go post-acquisition.

4. What Columns/Blogs Do You Read? 

The venture capital world is a highly connected one where networking is key, especially if you are trying to bring new deals to the table. Some prominent venture capitalists publish personal blogs or columns highlighting their perspectives on recent deals, upcoming IPOs, and general industry commentary.

Reading such material can give you insight into the current thinking and new developments in the industry. Staying in tune with such conversations shows the interviewer that you are highly connected and have your finger on the industry pulse. 

5. Where Do You See Yourself in Five Years?

While this is a question that an interviewer in any industry would ask, at a venture capital job interview, you should answer this question by stating your intention to eventually become a general partner of the firm. You want to give the impression that you are a dedicated individual who seeks long-term commitments. Explain that you will earn your promotions by letting the results of your work speak for themselves, and be ready to answer this follow-up question: "What results can we expect from you?"

You can also use a professional success story to illustrate what you bring to the table.

There are approximately 1,965 venture capital firms in the United States by the end of 2020, according to the National Venture Capital Association (NVCA).

6. How Would You Evaluate a Possible Portfolio Company and Its Business Plan?

Emphasize your ability to look beyond the numbers and read between the lines. Evaluating financial facts is much different than forecasting revenue potential. In an early-stage investment, two things will make the difference between success and failure: seasoned management and sales potential. Understanding how to effectively evaluate the leadership of the company and the reality of its market demand is crucial. The key to any venture capital investment is the prospects of the market.

This understanding should be central to your response. Tailor your answer to showcase how your experience and successes have developed your ability to project demand and forecast sales. If you have accomplishments where you developed a nascent concept into a market success, make sure to discuss how those experiences lend well to a venture capital career.

7. Tell Me About Your Most Challenging Professional Experience.

This is a great opportunity to make a lasting impression—take advantage of it. Choose an experience from your resume that showcases exactly how your skills would help you overcome the obstacles and challenges that arise in a venture capital career.

If you were involved with a startup organization that floundered, use that experience to showcase how your leadership turned the situation around, or explain the lessons you learned from that experience. (Remember, we tend to learn more from our mistakes than from our successes.) Discuss how your company released a product or service that did not perform well in initial market testing and how you used that information to create alternative uses or features that drove an eventual success. 

8. What Industries Are of Greatest Interest to You?

Venture capital firms tend to be highly specialized, and your answer must reflect that specialization . One way to distinguish yourself is to propose complementary niches to the firm. The company may disagree with your suggestions, but if you can provide compelling reasons for your proposals, you will have demonstrated industry insight and creativity that will go a long way toward impressing your interviewer.

9. What Have You Personally Invested In?

A venture capitalist makes a living putting their money where their mouth is, so the interviewer will expect that you should, too. Taking calculated risks for the potential long-term reward is an important characteristic to demonstrate. Show that your brokerage account shines with holdings in the industry's best and brightest companies, and that you placed them into your stock portfolio long before the general investing public got caught up in the hype. The venture capital industry is focused on startups and adding value to early-stage development companies, so give special emphasis to your investments in companies related to the particular specialties of the firm you are interviewing with.

Many of the questions asked at a venture capital interview are similar to questions an applicant would be asked at an interview in any field, such as: where do you see yourself in five years? Others are more specific, such as: what have you personally invested in?

The Parting Shot

The end of the interview represents the final opportunity to differentiate yourself from the competition. Focus on asking questions about the current activities of the firm not previously brought up in the interview process. Demonstrate your understanding of the firm's specialties and be sure to ask what they are looking for in a candidate and how well you measure up to that standard. This is known as "closing the deal," and you should never leave an interview without a strong close.

If you've landed a venture capital job interview, being prepared for these questions should put you on solid ground. Do your homework, and you'll be one step closer to the offer you're looking for.

Guy Kawasaki. " The Venture Capital Aptitude Test (VCAT) ."

National Venture Capital Association. " NVCA 2021 Yearbook ," Pages 5, 13.

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VC Interview - Case Study

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I am currently going through an interview process with a VC firm and have been asked to complete a case study at home. They let me pick they 24-hour window of my choice and I'm to return the deliverable the next day.

Anyone ever had something similar? What should I expect?

I've searched this forum (and others) but I haven't been able to find a lot of good info for VC case studies. Any suggestions on how to prepare?

HI, I am going through a similar process. Could you share some of you experience? What was the case about and what were they asking for? Cheers

I had 2 similar cases during my interviews.

In one, I was given a sales dataset for a fictional ecommerce company. Asked to go through it, evaluate the company, identify areas of concern, and identify additional questions to be asked. Product was a ~4 slide ppt deck. Very straightforward coming from a consulting background. Discussed my findings with an associate for about an hour.

In the other, I was given the pitch deck of an actual company the firm had been evaluating and asked to put together 1 page (word doc) on my thoughts: pros, cons, concerns, additional questions, etc. This was much more challenging without previous VC experience but much more indicative of the actual work I'm doing on the job. Discussed my thoughts with a VP for about an hour. Given the more subjective nature of the case, they were applying much more pressure on my assumptions.

VC Case Study ( Originally Posted: 11/24/2014 )

I recently made it through the phone interview portion for a pre-mba associate role at a family office VC fund. In a week or two I will be receiving a case study via email to complete and send back. Any idea on what I should expect? All replies are appreciated.

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Getting Started with Growth Equity Sourcing and Cold Calls

Introduction

The “cold call” or “sourcing” case study is a critical yet challenging part of  interviewing for growth equity and venture capital roles. When I started as an investor at General Atlantic, I had no previous experience with sourcing or cold calling; however, by the end, I came to enjoy them and they were a core part of my job.

In this article, I’ll share advice on how to get started with cold calling and sourcing in growth equity or venture capital. Cold calling and sourcing can also be key areas of growth equity and venture capital interviews, so I’ll share how you should approach  formal case studies  and  interview questions  in this area. With a little preparation, you can truly stand out in this area – both on the job and in interviews.

What is sourcing

If you are tasked with “sourcing,” tactically it means you will be finding companies and cold calling or emailing them. The purpose of this outreach is to introduce your firm and to learn about the company – in the best, learning enough to determine whether it’d be worthwhile to pursue the company further.

In many cases, “sourcing” can be very strategic as well. It can include developing entire investment  themes  for your firm. This means studying an attractive industry and identifying the business models or sub-sectors within it that are most attractive for investment.

Successfully developing an investment theme for your firm can be one of the highest leverage ways you can have impact as an investment leader, especially if you are able to convince other investment professionals to dedicate time to finding investment targets in it. You become known as a thought leader within the firm, and you shape the firm’s investments, potentially for years to come.

Who does sourcing

While investment professionals of every seniority contribute to sourcing within a firm, it’s typical that firms utilize junior investment professionals to do the lion’s share of frontline sourcing activities. This means that pre-MBAs and post-undergrads often develop lists of companies and do cold calls or emails to targets. Once a lead has been “qualified,” often a more senior member of the team (VP or higher) may take over the relationship and outreach with the investment target.

Why is sourcing important

Within growth equity and venture capital firms, the quality of your investments can only ever be as good as the quality of the investment targets you evaluate. Therefore, it’s of utmost importance to the firm’s success that it is identifying and building relationships with the highest quality companies through its sourcing program.

Especially given how competitive the growth asset class has become, it’s especially important that firms proactively find companies, rather than waiting to evaluate potential investments through inbound sell-side processes from bankers.

What most people get wrong about sourcing

I feel obliged to put in a rare  good word  for sourcing, since I feel it usually gets a bad wrap. Many candidates get scared away from firms that have the reputation for being too “sourcing heavy.” However, while I was an investor at General Atlantic, it was actually one of the most positive aspects of my experience.

I’ll explain. While all-day cold calling wouldn’t be fun for anyone – even to me – sourcing and cold calling for some portion of your day has a few main upsides I feel people ignore:

• Chance to learn sales skills  – by doing cold calling, I learned invaluable sales skills that will last a lifetime. While it was super scary at first to call a company, I started to learn to be okay hearing “no” and I got really good on the phone! As I’ve discussed previously, nearly all investment jobs turns into sales the more senior you get (i.e. selling yourself and your firm as a partner to prospects), and this is great training to start learning these skills at a young age
• Chance to interact with senior management  – as a junior professional, the reality is I knew I would not be “leading” a deal investment process for some time. Cold calling, sourcing, and prospecting activities offered a rare chance for me interact with management during this time without filters and often without any “supervision” from more senior investors. When you take a step back, it’s pretty awesome that in this role you are  empowered  to go out and build relationships with great management teams. Don’t waste this valuable experience!

What to expect in growth equity and VC interviews

Ok, now that we have a better idea of what sourcing and cold calling are, let’s talk about  interviews . In your  growth equity and venture capital interviews , here’s what you can expect:

• Specific interview questions on sourcing
• Mock cold call interview
• Take-home case study to find investment prospects

At a minimum, firms will ask  several interview questions  that are designed to get a sense of your attitude and willingness toward sourcing, regardless of your seniority level. However, for junior roles that are sourcing-heavy (e.g. analysts out of undergrad, or pre-MBA associate roles), many firms will go even further by asking you to do an entire mock cold call interview or a take-home case study dedicated solely to sourcing.

Here’s how one of my clients described his mock cold call case study experience:

After a recruiter passed my information along, I had a few calls with VPs and a partner, all of whom seemed generally interested in my attitude toward sourcing, whether or not I display an entrepreneurial mindset, and what I believe makes an interesting lead. For the mock sourcing call itself, I was given a software company name 24 hours ahead of the call. I was instructed to call a VP with the firm and role play that I’m cold calling the company’s CEO. In a span of 10-15 minutes, I was to “sell” the CEO on the firm and gather as much relevant information as possible on the lead. Then I was instructed to call back the VP, walk him through the lead, and convince him to meet with the company’s CEO.

Sourcing interview questions

In this section, I’ll run through the most common questions you can face during a sourcing interview, and I’ll share my thoughts on how to approach them.

What’s your attitude toward sourcing?

Overall, many firms know that sourcing can be a difficult part of the job. You want to come in with the attitude that you know what you’re getting into and you’re actually  very excited about this part of the job .

You want to convey that you think sales skills developed during sourcing will serve you for the rest of your career and you’re excited to learn them. Also, you could talk about how you think it’d be a really cool opportunity to be on the “front lines” with CEOs. There are few opportunities in investing firms to have such direct experience with CEOs and leaders of companies at such a young age.

What channels would you use to source company ideas?

First, it’s always important to acknowledge that, while you have several ideas, you’d of course look forward to learning from experienced hires at the firm to understand where they’ve had success finding proprietary ideas here. Finding proprietary deals is always the dream of any private investor, but it’s getting harder all the time so you need to get creative!

Here’s a list of some channels that  everyone  uses:

• Popular press (e.g. Techcrunch)
• Google searches
• Banker ideas

Note – just because everyone uses them, doesn’t mean you should ignore them, but especially in your interviews, I’d just be sure to acknowledge that you know these alone won’t give you an “edge” as a sourcer.

Here’s some better and more created channels:

• Niche trade publications (e.g. Oil & Gas Journal)
• Trade conferences – attend and/or look at the attendee/exhibitor lists (e.g. Digital Insurance Conference)
• Monitor LinkedIn for status changes on high potential executives and entrepreneurs
• Top company lists – many funds say they look at these, but often they slip through the cracks and forget about them (e.g. Inc 500 Fastest Growing Companies)
• Track top early stage investor portfolios
• Personal connections

How would you prepare for a sourcing cold call?

Just as in real life, I’d prepare for a mock cold call in the following way:

• Research the company – know the industry, rough size estimate (if available – employees, revenue, capital raised)
• Deeper research on promising prospects
• Listen to podcasts that the founder/company executives have done. Not time efficient, but for very promising prospects it can be very helpful
• Be able to talk about your fund’s track record of success in that space; be able to cite the deals that your fund has done in the space
• Call the worst prospects in a certain industry FIRST, then call the better ones after. That way you learn more
• Practice my high level script a few times (especially before high value prospects)

What are you trying to learn in a sourcing cold call, and how will you go about it?

Ultimately, your goal is twofold:

• You’re trying to learn about the company and whether it might be an interesting prospect to invest more time into.
• When in doubt, you’re trying to setup a second interaction (e.g. phone call or live meeting) to learn more

To achieve these goals, you are often trying to learn:

• How large is the company, and how fast is it growing? Ultimately this is assessing whether it might meet your fund’s investment parameters
• Is the company open to raising capital? Are they raising money right now?

Both of these can be quite challenging to surmise without being pushy, especially on the first meeting. The way I’d position your interest in these topics is:

I’m an investor and my firm helps entrepreneurs like you grow faster and expand. If you’re open to it, I’d love to learn a bit more about your business so I can see if we’d be the right fit for you. If we aren’t, perhaps I can refer you to other potential partners who could be a fit for you.

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Everything you need to master growth equity interviews, how would you introduce yourself on a sourcing call.

I always recommend keeping this brief. Most often, young sourcing professionals err on the side of talking too much. Usually, this is because they are nervous. It’s okay … I’ve been there too!

However, it’s important to recognize the point of the call is to have a conversation, not a monologue. That’s why I recommend using the following as a “base” format until you get your legs under you:

“Hi, I’m [First Name], I’m following up on the email I sent you on [Day]. It’s okay if you don’t recall, but I’m with [Firm Name]. We manage [X billions or millions] in investment funds, and we invest in great growth companies like yours.”

Pause. Let them speak. Then, you’ll typically follow up with something along the lines of:

You may have heard of us because we invested in [Notable Company Name]. If you have a few minutes, I wanted to call and introduce myself and compare notes on the [Industry Name] space. If it’s helpful, I can also share a bit about how my firm helps companies like yours to grow even faster through investment. Finally, it’s no problem if you aren’t raising money right now, but I wanted to call to make the connection now so we can be helpful when you are.

How would you introduce our firm on a sourcing call?

Sometimes the interviewer will want to hone in on how specifically you would describe or  pitch a company  to an entrepreneur. As shown above, when you are introducing yourself, typically you’ll introduce the company a bit as well. But if someone wants to go deeper, here are areas I’d be sure to have in your backpocket:

• Roughly how long it’s been around
• Typical investment sizes and deal profile
• Notable investments that are relevant to the prospect
• Firm value-add specialties that could be relevant to the prospect – does your firm specialize in helping with M&A, in expanding to international markets, or in navigating regulatory challenges?

Obviously, these may be difficult things to surmise from a growth equity and venture capital firm’s website alone. It’s actually less important that you know the specifics for each firm you interview with, but rather if you know that these are areas you’d study up on when doing real cold calls then that’ll show very well in an interview.

How would you secure a “follow up” meeting?

After the conversation has progressed a bit, and the company seems worth pursuing, be sure to ask for a follow up. You might say something along the lines of:

Listen, this has been really great getting a brief introduction to your business here today. I’d love to schedule another discussion (with yourself or with my broader team).

Usually it’s best to have some carrot to offer in this follow up conversation. What do you authentically have to offer that might entice the entrepreneur to take another meeting? A few ideas come up for me:

• Introduce you to my broader team  – may be of interest if the company is raising money soon
• Compare notes and/or share insights on their industry  – perhaps you have a portfolio company that has given your firm greater insight that could help the entrepreneur
• Discuss potential customer intros  – these are most valuable to the entrepreneur, but also the most rare; only offer if you truly can provide them

Ultimately, if you have to, you can fall back on, “I’d love to learn more about your fundraising plans, and how we might be able to help.”

If the entrepreneur is steadfast in refusing to spend more time with you (or wishy washy), don’t be too pushy. Your ultimate fallback is to follow up over email to set up another time later.

How would you brief your team after a sourcing call?

After a successful prospecting call, you’ll often be asked to brief your team on the company. Many firms simulate this in  interviews  by asking you to have a “mock briefing” with a teammate.

The key things they are assessing is your communication ability and conciseness. In terms of content, here are high level things you’ll want to be sure to cover:

• Company name
• Who you spoke with there
• What the business does, how they make money, and what market they’re in (concisely!)
• Why it could be a good fit for the firm (or not)
• Here’s the next step if we want to move forward

What makes a good lead?

Ultimately, in your sourcing you are looking for what will make a good investment. The keys for a good investment are:

• Company  – is the business high quality? In particular, is there: (i) a large and growing market; (ii) potential for a high margin business model, (iii) presence of a strong management team.
• Returns  – Is there potential for a  high return deal ? This is the least important to assess in early sourcing efforts, so don’t worry too much in figuring this out in your sourcing activities.
• Fit  – Is this a potential fit for your firm? Every firm tends to specialize in different business models, investment size targets, and value creation playbooks.

All of these are hard (or impossible) to figure out in an initial discussion with an investment prospect. However, in your discussion, you can start to tease out parts of these.

For instance, if you are a growth fund that doesn’t use debt to juice returns, then it’s unlikely a company could produce a high return if the company isn’t growing really quickly (15% per year or higher). Another one you can usually get signal on is whether the company fits your firm’s size or stage parameters.

Do you have experience with sourcing?

It’s okay if you don’t have any experience directly; not many people call companies in their spare time! The key here is to be creative about examples that will demonstrate you have grit, some gregariousness, and that it won’t be too difficult for you to jump into it.

If you don’t have direct experience, in your answer just acknowledge that, but then discuss how you have experiences you think are related in the sense that they made you comfortable with talking to strangers, selling, or dealing with failure.

• Have you ever had to cold call for  anything ?
• Have you sold anything door-to-door?
• Do you have any experience approaching strangers?
• Do you have experience where you had to deal with failure or rejection often?

Experiences from college, high school, or even childhood experiences in clubs, extracurriculars, or sports can be fruitful here.

How would you do sourcing in a new industry?

First, you always want to know the basics about the industry and companies you’ll be calling on. You should at least have some idea about how large the industry is, common business models, how firms make money, who the leading firms are, etc. If you don’t know these, your first step is to figure them out.

Next, let’s acknowledge that you will never know everything about the companies/industries you’ll be calling on. Part of why you are calling is to learn! Therefore you need to get comfortable with not knowing everything.

As you progress in the job you’ll get more comfortable at doing calls with less information, and you’ll get better at assessing whether or not the company/industry is a fit for your firm.

One trick that can be helpful when prospecting in new industries is what I call “ laddering .” Essentially what you do is you call less interesting prospects in an industry FIRST before you call the best/most interesting companies in the space. Often you can tell who the leaders are pretty easily, so just order those last in your call sheet. That way by the time you call the best ones, you’ll know more about the space and have more frame of reference to have a solid conversation

What if a prospect asked your rank and position at the firm?

This is simple…tell the truth! You’d say something along the lines of:

I’m a [position] at the fund, and I started here [start date]. Previously, I worked in investment banking at ZYX firm, and studied at [College/MBA]. I help lead our investment efforts in your industry, so I’m excited to connect with you.

What if a prospect said “I get a lot of these calls; I’m not interested”?

This is tough. At the end of the day, you can’t do anything about it if they aren’t interested an hang up. One last ditch way to try to salvage things is to acknowledge that you aren’t surprised that he or she gets lots of the calls given how exciting the business is, but that you are calling because you truly believe your fund could help him and is differentiated because of the experience you’ve had investing in related areas.

What if a secretary won’t let you connect with the CEO?

This is also a tough one, and it happens often. One route is you could ask if it’d be possible to follow up with the CEO via email to describe your firm and your interest in connecting. Another approach is to ask if there’s anyone else within the firm (e.g. CFO, co-founders, etc) that she’d recommend you connect with in order to introduce your firm. Finally, if true, you can also explain that you may be attending a relevant conference in the next few weeks, and you wanted to introduce yourself in advance to see if it’d make sense to schedule time with the CEO (if they are attending).

Mock cold call interview case study

Firms may test your sourcing attitude and skills through simple interview questions (addressed in the section above); however, it’s also possible they want to go a step further and do a  mock cold call case study interview .

For this case study, you’ll be asked to do a “role play” or “mock” cold call with an investment target. Typically, your interviewer will play the part of the CEO for the investment target, and your job will be to “sell” the CEO on the investment firm and gain as much relevant info as possible. Often, you’ll be given the name of the target company 24-48 hours in advance of your interview, so that you can do some preparation. Typically, the mock call with the CEO will be relatively fast (e.g. 15 minutes).

Then, after your mock call has concluded, sometimes firms will have you do a second phase of the interview role play. That is, you will call back your interviewer (this time he or she will no longer be role playing the CEO), and you will walk him through the lead and perhaps try to convince him or her to meet with the company’s CEO.

To prepare for a mock cold call interview, I first suggest you read the advice in the sourcing-related interview questions listed above. These should give you a solid base for handling the mock cold call interview (and cold calls in general).

However, I also provide actionable tips tailored to a mock cold call below.

Research the investment firm

Key to succeeding on a mock cold call interview is to know the firm you’re interviewing with. Just because it’s called a “cold” call, it doesn’t mean that you need to go in cold.

Make sure you can describe:

• The firm’s overall size and strategy
• Any relevant portfolio companies in related industries
• Typical investment profile

This will make sure you can accurately describe the firm and its track record to the lead you’ll be mock calling.

Research the target company & develop questions

Often, the firm will provide you with a real target company that you will be mock calling. If that’s the case, you should research all the critical basics (e.g. industry, product set, main competitors, past fundraisings etc.).

As you prepare, have a framework or checklist in mind for your criteria of what makes a “good lead.” I provided thoughts on this in the question above on what makes a “good lead.” Once you have this framework or checklist written down, try to answer as many of the questions about the company ahead of time. For those areas you can’t answer yet, add those to a list of areas you’ll try to ask about during your mock conversation with the company.

By the way, having a simple but clear checklist for what makes a good lead not only helps you develop a list of questions to ask the lead, but it also helps you sound really smart and competent when you report back to your interviewer about whether it was a good or bad lead. You can say something like:

“Well, I’m assuming that X, Y, and Z are needed to be an interesting lead to follow up on. X and Y look good. Z is still unclear, but based on this, I’d recommend we proceed with the lead”

Finally, if you really want to go above and beyond, I’d recommend you do a little background research on the company’s industry ahead of the call. It may be helpful to have both a “bull” and “bear” on the industry/market in your back pocket, as these can be helpful support to cite in your report back about the quality of the lead.

Be cool, calm, and concise!

Just remember, most of what they are testing in the mock cold call is how well you can represent the firm when nobody’s looking. Everyone knows that calling a prospect cold can be very challenging. You may not get what you want out of the call (a promising investment), but as long as you conduct yourself well and don’t get too pushy or flustered, you’ll do great in the interview.

If you are asked to walk the interviewer through the mock conversation and to sell him or her on the lead, just remember they’re really testing how concise and articulate you can be. Practice ahead of time explaining what the business is, what industry it’s in, and how it makes money.

Sourcing can be one of the most rewarding, if challenging, parts of growth equity and VC jobs . It’s a key part of interviews at these firms, and here we’ve covered many  critical interview questions  in this area.

To go into more depth, check out my article on  growth equity case studies , or my  full course on growth equity interviews and recruiting .

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What happened in the Kolkata rape case that triggered doctors’ protests?

Activists and doctors in India demand better safeguarding of women and medical professionals after a trainee medic was raped and murdered in Kolkata.

Activists and doctors across India continued to protest on Wednesday to demand justice for a female doctor, who was raped and murdered while on duty in a hospital in the eastern city of Kolkata.

Feminist groups rallied on the streets in protests titled “Reclaim the Night” in Kolkata overnight on Wednesday – on the eve of India’s independence day – in solidarity with the victim, demanding the principal of RG Kar Medical College resign. Some feminist protesters also marched well beyond Kolkata, including in the capital Delhi.

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While the protests were largely peaceful, a small mob of men stormed the medical college and vandalised property. This group was dispersed by the police.

This comes after two days of nationwide protests by doctors following the incident at RG Kar Medical College in West Bengal’s capital city. “Sit-in demonstrations and agitation in the hospital campus will continue,” one of the protesting doctors, identified as Dr Mridul, told Al Jazeera.

Services in some medical centres were halted indefinitely, and marches and vigils shed light on issues of sexual violence, as well as doctors’ safety in the world’s most populous nation.

What happened to the doctor in Kolkata?

A 31-year-old trainee doctor’s dead body, bearing multiple injuries, was found on August 9 in a government teaching hospital in Kolkata.

The parents of the victim were initially told “by hospital authorities that their daughter had committed suicide,” lawyer and women’s rights activist Vrinda Grover told Al Jazeera. But an autopsy confirmed that the victim was raped and killed.

Grover has appeared for victims in sexual violence cases in India in the past, including Bilkis Bano , a Muslim woman who was gang-raped during the 2002 Gujarat riots, and Soni Sori, a tribal activist based in Chhattisgarh state.

Thousands of doctors marched in Kolkata on Monday, demanding better security measures and justice for the victim.

On Tuesday, the Kolkata High Court transferred the case to the Central Bureau of Investigation (CBI).

The Federation of Resident Doctors Association (FORDA) called for a nationwide halting of elective services in hospitals starting on Monday. Elective services are medical treatments that can be deferred or are not deemed medically necessary.

On Tuesday, FORDA announced on its X account that it is calling off the strike after Health Minister Jagat Prakash Nadda accepted protest demands.

One of these demands was solidifying the Central Protection Act, intended to be a central law to protect medical professionals from violence, which was proposed in the parliament’s lower house in 2022, but has not yet been enacted.

FORDA said that the ministry would begin working on the Act within 15 days of the news release, and that a written statement from the ministry was expected to be released soon.

Press release regarding call off of strike. In our fight for the sad incident at R G Kar, the demands raised by us have been met in full by the @OfficeofJPNadda , with concrete steps in place, and not just verbal assurances. Central Healthcare Protection Act ratification… pic.twitter.com/OXdSZgM1Jc — FORDA INDIA (@FordaIndia) August 13, 2024

Why are some Indian doctors continuing to protest?

However, other doctors’ federations and hospitals have said they will not back down on the strike until a concrete solution is found, including a central law to curb attacks on doctors.

Those continuing to strike included the Federation of All India Medical Associations (FAIMA), Delhi-based All India Institute Of Medical Sciences (AIIMS) and Indira Gandhi Hospital, local media reported.

Ragunandan Dixit, the general secretary of the AIIMS Resident Doctors’ Association, said that the indefinite strike will continue until their demands are met, including a written guarantee of the implementation of the Central Protection Act.

Medical professionals in India want a central law that makes violence against doctors a non-bailable, punishable offence, in hopes that it deters such violent crimes against doctors in the future.

Those continuing to protest also call for the dismissal of the principal of the college, who was transferred. “We’re demanding his termination, not just transfer,” Dr Abdul Waqim Khan, a protesting doctor told ANI news agency. “We’re also demanding a death penalty for the criminal,” he added.

“Calling off the strike now would mean that female resident doctors might never receive justice,” Dr Dhruv Chauhan, member of the National Council of the Indian Medical Association’s Junior Doctors’ Network told local news agency Press Trust of India (PTI).

Which states in India saw doctors’ protests?

While the protests started in West Bengal’s Kolkata on Monday, they spread across the country on Tuesday.

The capital New Delhi, union territory Chandigarh, Uttar Pradesh capital Lucknow and city Prayagraj, Bihar capital Patna and southern state Goa also saw doctors’ protests.

Who is the suspect in the Kolkata rape case?

Local media reported that the police arrested suspect Sanjoy Roy, a civic volunteer who would visit the hospital often. He has unrestricted access to the ward and the police found compelling evidence against him.

The parents of the victim told the court that they suspect that it was a case of gang rape, local media reported.

Why is sexual violence on the rise in India?

Sexual violence is rampant in India, where 90 rapes were reported on average every day in 2022.

Laws against sexual violence were made stricter following a rape case in 2012, when a 22-year-old physiotherapy intern was brutally gang-raped and murdered on a bus in Delhi. Four men were hanged for the gang rape, which had triggered a nationwide protests.

But despite new laws in place, “the graph of sexual violence in India continues to spiral unabated,” said Grover.

She added that in her experience at most workplaces, scant attention is paid to diligent and rigorous enforcement of the laws.

“It is regrettable that government and institutions respond only after the woman has already suffered sexual assault and often succumbed to death in the incident,” she added, saying preventive measures are not taken.

In many rape cases in India, perpetrators have not been held accountable. In 2002, Bano was raped by 11 men, who were sentenced to life imprisonment. In 2022, the government of Prime Minister Narendra Modi authorised the release of the men, who were greeted with applause and garlands upon their release.

However, their remission was overruled and the Supreme Court sent the rapists back to jail after public outcry.

Grover believes that the death penalty will not deter rapists until India addresses the deeply entrenched problem of sexual violence. “For any change, India as a society will have to confront and challenge, patriarchy, discrimination and inequality that is embedded in our homes, families, cultural practices, social norms and religious traditions”.

What makes this case particularly prominent is that it happened in Kolkata, Sandip Roy, a freelance contributor to NPR, told Al Jazeera. “Kolkata actually prided itself for a long time on being really low in the case of violence against women and being relatively safe for women.”

A National Crime Records Bureau (NCRB) report said that Kolkata had the lowest number of rape cases in 2021 among 19 metropolitan cities, with 11 cases in the whole year. In comparison, New Delhi was reported to have recorded 1, 226 cases that year.

Prime Minister Modi’s governing Bharatiya Janata Party (BJP) has called for dismissing the government in West Bengal, where Kolkata is located, led by Mamata Banerjee of All India Trinamool Congress (AITC). Banerjee’s party is part of the opposition alliance.

Rahul Gandhi, the leader of the opposition in parliament, also called for justice for the victim.

“The attempt to save the accused instead of providing justice to the victim raises serious questions on the hospital and the local administration,” he posted on X on Wednesday.

Roy spoke about the politicisation of the case since an opposition party governs West Bengal. “The local government’s opposition will try to make this an issue of women’s safety in the state,” he said.

Have doctors in India protested before?

Roy explained to Al Jazeera that this case is an overlap of two kinds of violence, the violence against a woman, as well as violence against “an overworked medical professional”.

Doctors in India do not have sufficient workplace security, and attacks on doctors have started protests in India before.

In 2019, two junior doctors were physically assaulted in Kolkata’s Nil Ratan Sircar Medical College and Hospital (NRSMCH) by a mob of people after a 75-year-old patient passed away in the hospital.

Those attacks set off doctors’ protests in Kolkata, and senior doctors in West Bengal offered to resign from their positions to express solidarity with the junior doctors who were attacked.

More than 75 percent of Indian doctors have faced some form of violence, according to a survey by the Indian Medical Association in 2015.

What happens next?

The case will now be handled by the CBI, which sent a team to the hospital premises to inspect the crime scene on Wednesday morning, local media reported.

According to Indian law, the investigation into a case of rape or gang rape is to be completed within two months from the date of lodging of the First Information Report (police complaint), according to Grover, the lawyer.

The highest court in West Bengal, which transferred the case from the local police to the CBI on Tuesday, has directed the central investigating agency to file periodic status reports regarding the progress of the investigation.

The FIR was filed on August 9, which means the investigation is expected to be completed by October 9.

Bengal women will create history with a night long protest in various major locations in the state for at 11.55pm on 14th of August’24,the night that’ll mark our 78th year as an independent country. The campaign, 'Women, Reclaim the Night: The Night is Ours', is aimed at seeking… pic.twitter.com/Si9fd6YGNb — purpleready (@epicnephrin_e) August 13, 2024

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2024 Election

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Need help with VC interview case study!

Throwaway account. So I am being interviewed for a position at an early stage tech fund and part of the interview process is for me to create a recommendation presentation covering my investment recommendation, thought process and valuation based on a teaser of an imaginary company I was given.

Just curious for those who have worked in a fund - what’s your process? How do you even begin structuring a recommendation and a valuation with such limited information (10 slide teaser..)? Any insight appreciated!

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Turns out being a venture capitalist can be really hard and some VCs want out

• This post originally appeared in the Insider Today newsletter.
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Happy Friday! Have you sat on the couch while watching the Olympics and thought, "I could do that?" Well, you'd be wrong. Here are all the ways these elite athletes are quite literally built differently .

In today's big story, turns out being a venture capitalist can be really hard, and some VCs want out .

What's on deck:

• Markets: Want to know who will win in November? The stock market might have the answer .
• Tech: Charging things nowadays is kind of a nightmare .
• Business: The antitrust lawsuit from Elon Musk's X has already made an impact .

But first, I thought this was supposed to be fun.

If this was forwarded to you, sign up here.

The big story

We were promised big returns.

For venture capitalists, when the going gets tough, the tough get going…toward the exits.

Some VC workers are reconsidering their future as the industry goes through a rough patch, writes Business Insider's Sri Muppidi.

It's been a rough two years for VCs. Fundraising dried up. Firms downsized. Valuations have stagnated or, God forbid, gone down. That's left workers wondering: What the hell happened?

Just a few years ago, VCs were the toast of the town. A Patagonia vest and a pair of Allbirds might as well have been Superman's cape when it came to investing. The ink was barely dry on a deal before startups were raising another round, doubling their VCs' investment (on paper) along the way.

Even Wall Street got jealous of the eye-popping returns — again, on paper — that VCs were getting on. The hedge fund Tiger Global tried bullying its way into the space .

And then it all came crashing down .

VCs are on pace to raise $200 billion this year, which is about half of what they did in 2021. AI is the only bright spot in the startup community, making it incredibly crowded.

Meanwhile, exit opportunities — a chance for VCs to cash out — are few and far between. Eye-popping IPOs are a thing of the past, and acquisitions are a lot harder with high interest or at a much lower valuation than they once were.

To be sure, some VC complaints feel a bit overblown.

One Bay Area partner told Sri junior investors need to meet dozens of companies a week. Another lamented about constantly cold emailing founders.

While I imagine that's not necessarily fun , it does seem like a standard requirement for someone trying to find young companies to invest in. Soon-to-be unicorns aren't going to fall into your lap, even if it might have seemed that way before.

But the rub for many junior employees, sources told Sri, is that the work isn't leading to a pay off in the form of an investment. There are too many VCs vying for too few startups worth backing.

That's led to what feels like a lot of busy work and a lack of upward mobility, as funds aren't keen to promote when new deals aren't coming in.

Even if the industry faces an exodus of disillusioned junior employees, they'll likely still be a fresh crop eager to step up into the open spots that still remain.

Back when VC was booming in 2021, investment banks' juniors were complaining about long hours. A few years later, Goldman Sachs, one of the banks at the center of drama, saw a record number of applicants for its internship .

3 things in markets

• Forget the polls. The stock market can predict the election. Since 1928, the S&P 500 has had an 83% accuracy rate in predicting election outcomes. Market performance in the three months before the election is the key indicator to watch , with positive returns benefiting the incumbent party.
• Jamie Dimon sounds off. The JPMorgan CEO isn't buying the Fed's goal of getting inflation down to 2% . Also, according to Dimon, we're overreacting too much to the daily fluctuations of the market. (Sorry, Jamie, but it's my job.)
• Palantir + Microsoft = $$$. Wall Street was loving a partnership between the companies to offer AI and analytics to US government agencies . Palantir's stock finished the day up more than 11%.

3 things in tech

• Instagram wanted to get younger, so it looked to a rival for some help. Meta's Instagram ran ads on Google's YouTube to try and draw more teen users to the app. The result is an arrangement that helps one company by boosting its competitor .
• Dell is cutting jobs as it pivots to AI, but work will be easier for those who remain, according to an exec . The company is putting AI in four core areas, including software coding. An exec said AI will make jobs easier and more fulfilling, and some employees said they were excited about the implementation. Others doubted how useful it would actually be.
• Are you in Charging Cord Hell? Don't worry — you're not alone. Apple's ongoing switch from Lightning to USB-C charging cords has wreaked havoc on cord owners everywhere . Despite having tons of different cords, it can feel like you never have the one you need.

3 things in business

• Elon Musk draws first blood in his war with advertisers. The advertising trade group The World Federation of Advertisers is "discontinuing" activities for its Global Alliance for Responsible Media initiative in the wake of an antitrust lawsuit filed by Musk's X. The billionaire's fight with the ad group is just one of several wars he's waging — he's also battling Grimes, Sam Altman, and the UK Prime Minister.
• Google quietly scales back AI search results. AI Overviews made a splash when it debuted this spring due to its tendency to generate odd or incorrect answers (" Eat glue !"). A new study found that a shrinking proportion of searches are generating AI Overviews, and the ones that do appear are much briefer.
• These VCs — and their wallets — are unburdened by the context. Tech investors raised over $135,000 in a Zoom fundraising party for Democratic presidential nominee Kamala Harris. They hyped up the VP and made plenty of jabs at Andreessen Horowitz's Trump boosters.

In other news

• CrossFit Games suspended after competitor drowns during the swimming contest, CEO confirms.
• Paramount's TV networks are collapsing in a $6 billion hole .
• Sequoia invests in Reflection AI, a startup founded by Google DeepMind alum, at $100 million valuation, sources say .
• Apple's AI features could cost you more than you think .
• Ukrainian troops were seen pushing 6 miles into Russian territory, and the Kremlin can't decide if it's a 'large-scale provocation' or 'under control' .
• 42 downturn-resistant stocks to help you sleep at night: Bank of America .
• Eventbrite is laying off 11% of its staff .
• Inside the Alaska Airlines blowout: staff describe loud bangs, 'whooshing air,' and other chaos .
• The case for HIIT: Why short, intense workouts are so good for your fitness and longevity .
• David Copperfield accused of trashing his $7 million NYC penthouse in new lawsuit .
• Middle East wealth funds are scrambling to rescue their big bets on the future .
• Banks are restricting employees from donating to the Harris-Walz campaign. Here's why .
• The AI industry has a major problem: the real-world data used to make smarter models is running out .

What's happening today

• Disney holds its D23 Expo in Anaheim, California.
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What margins? AI’s business model is changing fast, says Cohere founder

OpenAI and Anthropic spend billions of dollars a year training models like GPT-4 and Claude, but competitive price dumping is making the business around these platforms rather precarious. Aidan Gomez, CEO of competing AI provider Cohere, says that selling access to models is quickly becoming a “zero margin business” in a podcast appearance on Monday. For now, these AI models cost more than they make.

“If you’re only selling models, for the next little while, it’s gonna be a really tricky game,” said Gomez in an interview with 20VC’s Harry Stebbings. By “selling models,” he means selling API access to those AI models; OpenAI, Anthropic, Google and Cohere offer this service to developers, and they’re all facing a similar problem.

“It’s gonna be like a zero margin business because there’s so much price dumping. People are giving away the model for free. It’ll still be a big business, it’ll still be a pretty high number because people need this tech — it’s growing very quickly — but the margins, at least now, are gonna be very tight.”

Companies building AI models on the cutting edge are in fierce competition with each other. The most reliable strategy for improving AI models today is adding more compute, which means cutting big checks to Nvidia for the hardware needed to make AI models a hair smarter. At the same time, there’s a race to the bottom. OpenAI and Google have slashed prices for accessing their AI models in order to retain users — while Meta’s open source models are simply free to license.

“That’s why there is a lot of excitement at the application layer,” said Gomez, referencing OpenAI’s $20 a month ChatGPT subscription. Gomez says Cohere’s AI models will be an attractive business in the long term, but products could be a meaningful way to generate revenue until then.

In other words, today’s AI models lose money — lots of it. While Microsoft and Google can subsidize or simply weather that loss, that’s not usually the case for startups. Cohere is one of the last remaining startups developing frontier AI models, alongside OpenAI, Anthropic and Mistral. Other startups like them — Inflection, Adept, Character.ai — have been acqui-hired by large cloud providers , leaving an unprofitable business model husk behind while preserving their powerful technology.

However, Big Tech is kind of eating these new companies alive before they have a chance to become competitors.

“It’s really dangerous when you make yourself a subsidiary of your cloud provider,” said Gomez, noting that venture capitalists just want a nice return, while cloud providers may want something more. “It’s just not good business.”

Companies creating cutting-edge AI models are in an increasingly difficult position. There’s speculation that innovations in model architecture, data efficiencies or computing power will generate huge returns for these AI models some day. However, there’s no telling when, or if, that day will come. And evidently, not every AI startup today will be around see it.

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July 2024 recorded PE/VC Investments worth US$2.7 billion across 81 deals: EY-IVCA Report

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IVCA_EY Monthly PEVC Roundup July 2024 (PDF)

• Buyout investments were the highest deal type in July 2024, followed by start-up investments
• PE/VC exits in July 2024 were at US$2.5 billion, a 16% decline y-o-y
• Infrastructure was the top sector in July 2024, recording US$690 million

Mumbai, 14 August 2024: According to the IVCA-EY monthly PE/VC roundup, PE/VC investments in July 2024 were 35% lower than June 2024 in value terms.

Vivek Soni, Partner and National Leader, Private Equity Services, EY said, “July 2024 recorded US$2.7 billion in PE/VC investments, a decline of 42% compared to July 2023 and 35 % lower than June 2024. The number of deals in July 2024 was higher by 19% y-0-y.

In July 2024, pure play PE/VC investments reached US$1.8 billion, a decline of 56% compared to July 2023 (US$4 billion) and were 51% lower compared to June 2024 (US$3.6 billion). The number of deals was higher by 8% y-o-y (69 deals in July 2024 vs. 64 deals in July 2023). Investments in the real estate and infrastructure asset class in July 2024 (US$926 million) were higher by 67% y-o-y compared to July 2023 (US$554 million) and 82% higher compared to June 2024 (US$508 million).

Buyout investments was the largest deal type in July 2024 at US$1.2 billion, accounting for 45% of the overall investments in July 2024. This was followed by start-up investments (US$729 million). From a sector point of view, infrastructure was the top sector in July 2024, recording US$690 million in PE/VC investments.

PE/VC exits were at US$2.5 billion across 16 deals in July 2024, a 16% decline y-o-y (US$3 billion in July 2023). Strategic exits in July 2024 accounted for 65% of overall exits by value (US$1.6 billion).

Buyouts enable PE/VC investors to acquire the controlling stake in a company, allowing them to make strategic decisions and turn around underperforming companies. The acquisition of controlling stakes in well-established companies with strong fundamentals offers superior risk adjusted returns to PE/VC investors. Which is why, despite global headwinds and uncertainties, buyouts are emerging as a preferred strategy for Large PE/VC investors. Please see the spotlight section for more details.

While the Indian markets have demonstrated resilience and continue to show strong signals, the second half of 2024 appears to have had a weak start. We expect PE/VC investors to take a cautious approach as concerns over global uncertainties, inflation and geopolitical tensions play out, influencing the confidence and willingness of investors to deploy additional capital. The announcements made in the union budget have been overall net positive for the PE/VC sector, and with the Angel Tax removal, we expect to see a pickup in the start-up space. We remain cautiously optimistic about the Indian PE/VC outlook for the rest of 2024.

Investments

PE/VC investments in July 2024 (US$2.7 billion) were 42% lower than July 2023 (US$4.6 billion) and 35% lower than June 2024 (US$4.1 billion). In terms of the number of deals, July 2024 recorded 81 deals 19% increase compared to July 2023 (68 deals).

July 2024 recorded six large deals (deals valued US$100 million), aggregating US$1.5 billion, a 58% decline y-o-y in terms of value (US$3.6 billion across 10 deals in July 2023). The largest deal in July 2024 was Brookfield’s investment of US$550 million in Leap Green Energy.

Buyout investments had the largest share in July 2024, with US$1.2 billion invested across five deals compared to US$2.9 billion across six deals in July 2023, marking a decline of 58%. Start-up investments were the second largest, with US$729 million invested across 48 deals in July 2024, a growth of 31% compared to US$558 million across 40 deals in July 2023. Growth investments ranked third highest in July 2024 (US$518 million across 12 deals) with 55% growth compared to July 2023 (US$334 million across eight deals). This was followed by credit investments (US$196 million across nine deals), a 44% decline compared to July 2023 (US$352 million recorded across seven deals). Lastly, PIPE investments stood at US$33 million across seven deals compared to US$485 million across seven deals in July 2023, a decline of 93%.

From a sector perspective, infrastructure was the leading sector  in July 2024, with US$690 million in PE/VC investments across six deals, followed by e-commerce (US$404 million) and healthcare (US$307 million). These sectors cumulatively accounted for 52% of total PE/VC investments in July 2024.

Spotlight: pure play buyouts

Over the last 4-5 years, the buyout investment strategy has gained significant momentum within the broader Indian PE/VC landscape. In recent  years, we have seen a rise in buyouts, complemented by large deal sizes despite ongoing uncertainties and geopolitical tensions.

Buyout transactions have evolved from targeting small companies to encompassing large-cap deals. Some of these transactions  involved taking control of long-standing businesses with strong growth potential.

Taking the last five-year’s view (since 2019), buyouts have ranked third among investment strategies for PE/VC investors, following start-up and growth investments. They have recorded a cumulative value of US$44.3 billion across 165 deals,  accounting for 20% of overall PE/VC investments in the pure play class. Compared to buyouts in real estate and infrastructure asset classes, pure play buyouts were higher by 13% in value terms. (US$39.3 billion across 147 deals).

After reaching an all-time high of US$17.1 billion, buyouts experienced a 78% year-on-year decline in 2022. However, they  rebounded in 2023, registering an impressive 98% growth to reach US$7.4 billion, compared to US$3.8 billion in 2022. Buyouts in 2024 (till July) have already accounted for 80% of the buyout investments in the previous year (US$5.9 billion).

In the pure play asset class, buyouts have accounted for 20%, 12%, 26%, 9%, 23% and 29% of the overall pure play PE/VC investments each year since 2019 to 7M2024. This growing trend highlights the preference of PE/VC investors for buyouts as an investment strategy.  Key PE funds   involved in buyout deals include Blackstone, Advent, BPEA EQT, Warburg, CVC, TPG, PAG and KKR.

From a sector perspective, the technology sector led both in terms of value and volume (US$18.5 billion across 31 deals). Financial services followed with buyouts totaling US$7 billion. Pharmaceuticals ranked third with buyouts totaling US$5.6 billion. These sectors accounted for 70% of the overall buyouts since 2019. Other sectors that followed were healthcare (US$4 billion), industrial products (US$3.7 billion), and retail and consumer products (US$1.5 billion).

Overall, the buyouts trend in India reflects the increasing maturity of the PE/VC market and the growing confidence of investors in their ability to identify and unlock value in not only the established businesses but also in high potential early-stage companies.

Download the full pdf

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Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform, and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data, and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law were prohibited by local laws. For more information about our organization, please visit ey.com.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

The Indian Private Equity & Venture Capital Association (IVCA) is the apex body promoting the Alternative Investment Funds (AIFs) in India and promotes stable, long-term capital flow (Private Equity (PE), Venture Capital (VC) and Angel Capital) in India.

With leading VC/ PE firms, institutional investors, banks, corporate advisers, accountants, lawyers, and other service providers as members, it serves as a powerful platform for all stakeholders to interact with each other. Being the face of the industry, it helps establish high standards of governance, ethics, business conduct and professional competence. With a prime motive to support the ecosystem, it facilitates contact with policy makers, research institutions, universities, trade associations and other relevant organizations. Thus, support entrepreneurial activity, innovation, and job creation.

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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.