How to solve this VC interview questions
How to approach this question?
We have a EUR 60m early stage tech VC fund. What is the average initial investment ticket that we deploy and how much ownership do we get out of this investment? *
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You'd want to look at past investments to see if they're the lead investor and actively syndicate deals or if instead they're just writing small checks all around. It also looks like you're getting different ownership stakes for check size (e.g. EUR 1.5m // Ownership: 8% v. EUR 300k // Ownership 25%) which would imply different levels of maturity for their target investments.
You should probably have a clear sense of what they've done in the past. I know you said early stage but that's still broad, as there are some "early stage" that do seed rounds at most, and some "early stage" that go up to and do most of deals in Series B. They may have defined that, and if they have, you should check that out. Also, average check size of 300k? They're going to make 200 investments from one fund, all else equal?
I'm sure someone has a better, more technical answer to this question, but do consider just the basics. I think you can get far just thinking through this one. Hope this helps.
This is a silly question, but I assume it is trying to gauge your understanding of VC.
$60mm fund is pretty small so it has to be early stage. With that type of fund size they can't be writing too large of checks in order to allow for follow on investment. Unless they throw in a large amount at targeted investments, I'd say they are most likely going between $750 -1.5M per investment. The optimal portfolio is like 23-28 companies, so to allow for enough investment, management fees, business trips, conferences, etc, that should be good. Most of these smaller earlier stage funds say they want to be the founders first call. VCs like Charlie O'Donnell of Brooklyn Bridge Ventures specifically won't invest if you've already raised > $500k.
In conclusion, make sure you know the size of the fund, their sectors, theses, and partners previous roles. All of that will tell you if they are early or super early.
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