As I go through my VC interviews, one thing that strikes me is that this is not just about capability (a lot of us are capable enough), it is about luck and timing. I see jobs that I know I am good enough for go by just because someone did not remember me when the opportunity came by. So for all those people working hard towards a career in VC, remember, it is all about your network at the end of the day. It is only when you get the opportunity that you will get the job.
So what are Venture Capital interviews all about? Depends on the position I suppose. Let's reframe the question: What are Venture Capital interviews for an Associate position all about?
I will bucket what I am asked into three categories:
2. Financial Knowhow
1. Technical/Investment - This category of questions focuses on your ability to know the sector you are positioning yourselves in and your awareness of the current startup scene in it. One is asked questions about what trends they see in this sector, what kind of companies are succeeding and what are failing, and what is your projection for the future. A second sort of questions are around any investment "holes" that you see in this sector, and any areas of opportunities. This part of the process usually ends with some recommendations for interesting startups in multiple areas of your positioning.
2. Financial Knowhow - This category has to do with the finance of Venture Capital. Now, I have heard conflicting stories from different interviewees. Some vouch for the fact they were never asked any financial questions and some (like me) will tell you that we spent days working on significantly complex models for these interviews. A brief list of things that you should know:
- Cap Tables/Pro-forma Cap tables
- Effects of various sorts of Anti-dilution terms
- Different kinds of securities and their impact on exits
- Returns Analysis
- The overall VC method of valuing deals
- Basic Corporate finance (chump change for Wharton Students)
3. Fit - This is probably the most important part of the interview process. The first two sections are used to weed out the candidates. The last part is used to select them for the job. This can seem easy to deal with at first, and it is if you have thought through your motivations to find a Venture Capital opportunity. I believe that if you are really sincere about this field and have worked your way towards understanding it, then this part is more about cultural fit between the firm and you. You should spend as much time questioning them as they do, because you need to fit in as much as the firm needs to fit you. Expect questions about Why VC, why particular sectors, What you like or dislike about the field, and where do you see yourselves in a few years. Again, things that you have dealt with multiple times in Business school.
However, do not underestimate the power of establishing rapport and connections with the partners interviewing you. I subscribe to the theory that one should be themselves and not go out of one's way to appeal to the interviewers because at some point, the facade will lift and you will be one misfit in the firm.
All in all, spend a ton of time thinking through the fit part of the interviews.
The investment and fit part usually happens on location during the interviews, however I have been given business plans and case studies to work through at home before or after my on-site interviews. This gives you some time to understand how to attack the problem, but it does involve a lot of work.
In the end, I would say have fun with the process. If you do not enjoy the interviews then you will not enjoy the job. The only problem with this process is that it is SO LONG. It goes on and on and on...and you do not know where you are. If VC was a girl, then she better be very very attractive because that amount of courtship would wear out most men!
Oh well, I am still in the game (and enjoying it for what it is worth).