Venture capital (VC) careers are competitive, with far more interested candidates than open positions. You should only consider a venture capital job after you have had many years of practical, relevant, and successful experience.
Venture capitalist Guy Kawasaki put it best when he said he imagines himself saying the following to an entrepreneur on the other side of the table: “Why would you want advice from someone whose background consists of working in a college bookstore or making spreadsheets? at an investment bank? “
If you have the necessary background, preparing for common questions will help you shine in your venture capital job interview. Many of the questions you can expect during a venture capital job interview are general in nature, but others are unique to the venture capital industry. Next, 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 to work at our firm?
Before the interview, do a thorough research on the company to gain in-depth knowledge of the company and the industry that will set you apart from other candidates. Your answer to this interview question should show this knowledge along with your general enthusiasm for investing in young companies (but don’t mention the significant compensation associated with it).
This is your opportunity to pass on your passion for the initial activities of the company. If your answer centers on a love of spreadsheets, you may forget to move on to the next stage. Instead, think about what excites you about seedling businesses. Project that energy and those points and you will connect with the interviewer. Also, point out how the particular company you are interviewing with fits into your desired career path and why your experience would be ideal for this company.
2. What are some of the recent developments in our industry?
Venture capital firms look for employees with proven experience, often in a particular industry that the firm focuses on. You should not only show your knowledge of general developments and trends in the industry, but also elaborate on the specific influences currently affecting the market. Demonstrate knowledge that only an experienced industry expert would have. Talking about a product launch or the strategic decision of a particular company would be a great method to do exactly that.
3. What has been the most interesting initial public offering or acquisition in our industry in the last 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 you could strengthen your market position. Consider 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 you show clients that you understand their field and where they can go after the acquisition.
4. What columns / blogs do you read?
The world of venture capital is highly connected in which networking is key, especially if you are trying to bring new deals to the table. Some prominent venture capitalists post personal blogs or columns highlighting their perspectives on recent deals, upcoming IPOs, and general industry commentary.
Reading such material can provide you with insight into current thinking and new developments in the industry. Staying in tune with such conversations shows the interviewer that you are highly connected and aware of the pulse of the industry.
5. Where do you see yourself in five years?
While this is a question that an interviewer in any industry would ask, in a venture capital job interview, you should answer this question by indicating your intention to eventually become a general partner of the company. You want to give the impression that you are a dedicated person looking for long-term commitments. Explain that you will get your promotions if you let the results of your work speak for themselves and are ready to answer this follow-up question: “What results can we expect from you?”
You can also use a career success story to illustrate what you bring.
There are approximately 1,965 venture capital firms in the United States as of the end of 2020, according to the National Venture Capital Association (NVCA).
6. How would you evaluate a potential portfolio company and its business plan?
Emphasize your ability to look beyond the numbers and read between the lines. Assessing financial facts is very different from forecasting income potential. In an early stage investment, two things will make the difference between success and failure: experienced management and sales potential. Understanding how to effectively assess company leadership and the reality of market demand is critical. The key to any venture capital investment is the market outlook.
This understanding should be critical to your answer. Tailor your answer to show how your experience and successes have developed your ability to project demand and forecast sales. If you have accomplishments where you developed a fledgling concept into a market hit, be sure to discuss how those experiences lend themselves 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 shows exactly how your skills would help you overcome the hurdles and challenges that arise in a venture capital career.
If you were involved with a startup organization that failed, use that experience to show how your leadership changed the situation or explain the lessons you learned from that experience. (Remember, we tend to learn more from our mistakes than from our successes.) Analyze how your company launched 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 eventual success.
8. What industries are of most interest to you?
Venture capital firms tend to be highly specialized, and your response should reflect that specialization. One way to distinguish yourself is to propose complementary niches to the firm. The company may not agree 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 in impressing your interviewer.
9. What have you invested in personally?
A venture capitalist makes a living putting his money where his mouth is, so the interviewer will expect you to too. Taking calculated risks for possible long-term reward is an important trait to demonstrate. Show that your brokerage account shines with holdings in the industry’s best and brightest companies, and that you placed them in your stock portfolio long before the general investing public was 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 that are asked in a venture capital interview are similar to the questions that an applicant would be asked in an interview in any field, such as: where do you see yourself in 5 years? Others are more specific, such as: What have you invested in personally?
The goodbye shot
The end of the interview represents the last chance to differentiate yourself from the competition. Focus on asking questions about current company activities that were not mentioned earlier in the interview process. Show your understanding of the company’s specialties and be sure to ask what they are looking for in a candidate and how well they live up to that standard. This is known as “closing the deal” and you should never leave an interview without a solid closing.
If you’ve landed a venture capital job interview, being prepared for these questions should put you on a solid footing. Do your homework and you will be one step closer to the offer you are looking for.