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WSO Free Modeling Series - Now Open Through
May 31, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
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+Bonus: Get 27 financial modeling templates in swipe file
Have you tried googling VC associate interview questions? Look through the massive FREE database of questions on WSO/Glassdoor from the interview processes of firms that might be similar. If you can't figure out how to search for a general idea of what to expect that's a red flag. Be more specific. What stage, sector and size fund? Role duties? Background? Come on man give us something to work with.
Oh, come on, give him something to work with. Half the reason you come to WSO is so that you don't have to spend 10 hours aggregating interview questions, trying to figure out which ones are worthwhile, when you could be coming on here and asking people who have gone through the process and actually done the thing itself, so that you can just go straight into learning what you need to learn. Speaking of...
Here are the analyses you need to either know or be comfortable talking about (1) roll back / roll forward largest customer analysis; (2) cap table math / pre-money post-money valuations; (3) net dollar retention; (4) magic number; (5) interpreting LTV : CaC ratios; (6) Paid CaC vs. Blended CaC and what that means; (6) cohort retention analyses; (7) cohort LTV calculation; what MRR/ARR you look for at different stages
You need to know how sourcing works through the lifecycle of being an associate. When you start out you're going to have to go to lots of demo days so that you share deals with other people who might be looking for something slightly different but know what you're looking for. Then you build the network and start to get more inbound as people share and go to more fund-specific conferences
Have companies to pitch, and get on the phone with the founders. Pitch viable companies to invest in. If your fund is Series B, pitch Series A companies. Talk to founders so that you can unearth something unique about the company and show the fund. You won't find that on the glassdoor question bank, but it's good advice.
Know who the best investors are, what they're interested in (e.g., Bill Gurley) and consume media by the best VC reporters (know who they are), and be up to speed on the best current journalism in the space (e.g., the Stratacherry article about Uber and Vision Fund that was an instant classic). Listen to the right podcasts - Invest like the best is good, some people like 20minuteVC (can't stand him).
Be able to talk about markets you're interested in so they know you can assess a marke, why good companies make markets and examples other than Uber, emerging technologies that you're interested in so that you can show you can do a product diligence
This all comes together because you need to be able to develop a thesis around markets / products / space that you like, source against that thesis, be able to quarterback your own diligence, close that deal and negotiate. On that point, you should know what some of the most recent "hot" items are, like SAFEs ever since they were introduced by Y combinator. Understand things like convertible notes. You should understand how that math works for convertible notes if early stage; in the next round, such as how you use the lower of previous round share price * (1 - discount rate) or the previous round share price * (previous round pre-money valuation / valuation cap of note).
Don't be zero value add the next time you see a post asking for help unless you have something exceptionally funny to say. Sometimes people just need a nudge in the right direction and you never know who's going to stumble upon what you write. Everyone needs help and if you write something helpful on this site, odds are people will find it for a long time to come.
Just wanted to add my two cents here as someone who just got done with interviewing with a couple VCs.
All of what mmpewso has been great. The one thing that was significantly different from my experience was the first point. All of the technical stuff might come into play when working on a case study, but it mostly becomes relevant based on what company you are looking at. I didn't have any of those items in my pitch. I did have some basic information like TAM and SAM, but I mostly focused on the market potential.
I think it's also a great idea to speak to founders. They're not always going to be receptive, especially if they're an experienced entrepreneur with previous exits, but it's been mostly a numbers game for me. I was convinced more than once by founders regarding the viability of their ideas. A startup may seem pointless upon first glance, but speaking to a founder can really change that.
Don't forget that relationships are important as well. I personally hate the word networking because it sounds so superficial. I like to think that I'm building a relationship with someone when I'm speaking to them over the phone or via a face-to-face visit. This also means that you should talk to people you're actually interested in, rather than blindly shooting out cold emails.
Each shop is different, but my experience has been that if you show that you're passionate about technology and can back it up with solid examples, you're golden. VC interviews are a lot less formal than banking or buy-side interviews; you never know what rabbit hole you'll be going down.
I could be wrong in this opinion, and I urge anyone that disagree to challenge me on this, but I personally believe that everyone has the potential to succeed in VC. You bring your own unique set of experiences to the table. You need to be able to leverage this into how you view startups and voice your thoughts in a coherent manner.