Top 30 Venture Capital Interview Questions (2026)
Master the 30 most common VC interview questions with detailed frameworks, calculations, and sample answers for market sizing, startup evaluation, unit economics, and more.
Venture capital interviews are unlike any other finance interview. While PE and IB focus on financial modeling and deal execution, VC interviews test your ability to evaluate markets, founders, and startups - often with incomplete information and high uncertainty.
This guide covers the 30 most common VC interview questions, organized by category: market sizing, startup evaluation, unit economics, term sheets, portfolio construction, and investment judgment.
What VCs Are Really Testing
VC interviews do not have right answers like accounting questions. They test your thinking process, intellectual curiosity, and ability to form conviction under uncertainty. How you think matters more than what you conclude.
1. Market Sizing Questions (TAM/SAM/SOM)
Every VC interview includes market sizing. VCs need to know if a startup market is big enough to generate venture-scale returns (10x+ for the fund).
Market Sizing Framework
| Term | Definition | Note |
|---|---|---|
| TAM (Total Addressable Market) | The entire market if you had 100% share | Theoretical ceiling |
| SAM (Serviceable Addressable Market) | The portion you can realistically target | Geographic, segment constraints |
| SOM (Serviceable Obtainable Market) | What you can capture in 3-5 years | Competition, execution reality |
Top-Down vs Bottom-Up
Two Approaches to Market Sizing
Top-Down: Start with total market spend, then narrow down. Global HR software is $50B. US is 40% = $20B. Mid-market is 25% = $5B.
Bottom-Up: Count customers and multiply by ACV. 200K target companies x $25K ACV = $5B TAM.
Best practice: Do both and triangulate. If they do not match, understand why.
You're sizing the TAM for a B2B HR software startup targeting mid-market companies (100-1,000 employees). There are 200,000 such companies in the US. Average contract value is $25,000/year. What's the TAM?
Common Market Sizing Questions
Q: Size the market for electric scooters in NYC
I will use bottom-up. NYC has around 8M people. Maybe 30% are in scooter-appropriate areas with good infrastructure. That is 2.4M people. Of those, maybe 5% would use scooters regularly - that is 120K potential daily active users. If each ride is $5 and average users ride 3x/week, that is $5 x 3 x 52 = $780/year x 120K = around $94M TAM for ride revenue alone. Add in subscription models and you might double that.
2. Startup Evaluation Questions
VCs evaluate startups across four dimensions: Team, Market, Product, and Traction. Interview questions probe your ability to assess each.
The VC Evaluation Framework
| Term | Definition | Note |
|---|---|---|
| Team | Founder-market fit, relevant experience, ability to recruit | At early stage, team is 80% of the decision |
| Market | TAM size, growth rate, timing (why now?) | Big markets forgive mistakes |
| Product | 10x better than alternatives, defensibility, moat potential | MVP quality matters less than insight |
| Traction | Revenue, users, engagement, growth rate | Evidence > promises |
Common Evaluation Questions
Q: What would make you excited about a Series A company?
I would want to see: (1) Product-market fit signals - strong retention (over 80% monthly), organic growth, customers asking for more features, (2) A team that has been in the industry and understands the customer deeply, (3) A large market with a clear why now - some structural change enabling this business, and (4) Early signs of a moat - network effects, data advantages, or high switching costs. Revenue matters less than the quality of revenue: are customers loving the product?
Q: How do you evaluate a founder you have never met?
Reference calls are critical - I would talk to former colleagues, investors, and especially people who have chosen not to work with them. I would look at their background for founder-market fit: Have they lived this problem? Can they recruit strong talent? I would also assess their thinking process in our conversations: Do they have strong opinions loosely held? Can they admit what they do not know? Are they coachable?
Q: Name a red flag that would make you pass on a deal
A founder who cannot clearly articulate why their solution is 10x better than alternatives. If the value prop requires explanation, customers will not get it either. Other red flags: high founder churn (co-founders leaving), inability to recruit strong people, misleading metrics in the pitch, or a why now that is really just why me.
3. Unit Economics Questions
Unit economics determine whether a business can scale profitably. VCs use these metrics to separate sustainable growth from burning cash to buy revenue.
LTV = (ARPU x Gross Margin) / Churn RateCustomer Lifetime Value - the total gross profit expected from a customer relationship.
ARPU=Average Revenue Per User (monthly or annual)Gross Margin=Revenue minus direct costs (%)Churn Rate=% of customers lost per periodLTV:CAC Ratio = LTV / Customer Acquisition CostThe efficiency of growth. How much value you generate per dollar spent acquiring customers.
LTV=Customer Lifetime ValueCAC=All costs to acquire a customer (marketing + sales)Unit Economics Benchmarks
| Term | Definition | Note |
|---|---|---|
| LTV:CAC > 3x | Healthy economics, can scale profitably | Target for most SaaS |
| CAC Payback < 12 months | Recover acquisition cost within a year | Important for capital efficiency |
| Net Revenue Retention > 100% | Existing customers grow despite churn | Sign of strong product-market fit |
| Gross Margin > 70% | Software-like margins enable scale | Lower margins need higher volume |
A SaaS startup has: CAC = $500, Monthly subscription = $50, Gross margin = 80%, Annual churn = 20%. What's the LTV:CAC ratio?
4. Portfolio Construction and Fund Math
VCs think at the portfolio level, not just individual deals. Understanding fund economics helps you think like an investor.
A $100M VC fund makes 20 equal investments. One exits at 50x, three exit at 3x, six exit at 1x, and ten go to zero. What is the fund's MOIC?
The Power Law
VC returns follow a power law distribution: a small number of investments generate most returns. The top 1-2 investments in a fund often return more than all other investments combined. This is why VCs seek companies that can return 10-100x, not 2-3x.
Fund Math Essentials
| Term | Definition | Note |
|---|---|---|
| 2x Fund Return | Return $2 for every $1 invested | Decent, not great for early stage |
| 3x+ Fund Return | Top quartile performance | What LPs expect from VC |
| Ownership Target | VCs target 15-25% ownership at entry | Enough to move the needle on returns |
| Reserve Ratio | 50% of fund for follow-ons is common | Protect ownership in winners |
5. Term Sheet and Deal Structure Questions
Understanding term sheets shows you can think about the economic and governance implications of investment terms - not just the headline valuation.
Key Term Sheet Concepts
| Term | Definition | Note |
|---|---|---|
| Pre-Money / Post-Money | Pre = value before investment; Post = Pre + Investment | Post-money = what your ownership is based on |
| Liquidation Preference | Investors get their money back first in an exit | 1x non-participating is founder-friendly |
| Anti-Dilution | Protection if future rounds are at lower valuations | Weighted average is standard |
| Pro-Rata Rights | Right to maintain ownership % in future rounds | Important for fund strategy |
Q: A company raises $5M at a $15M pre-money valuation. What ownership does the investor get?
Post-money valuation = $15M + $5M = $20M. The investor gets $5M / $20M = 25% ownership. This is straightforward, but the nuance is in the details: Is this on a fully-diluted basis? Is there an option pool expansion included? Those can significantly change the effective ownership.
Q: Why might a founder prefer a lower valuation with better terms?
A high valuation creates pressure - you need to grow into it, or your next round is a down round with bad signaling and anti-dilution hits. Lower valuation with founder-friendly terms (1x non-participating liquidation preference, no redemption rights, board control) can be better in the long run. Also, a strong VC at a lower valuation beats a weak VC at a higher valuation - the value-add matters.
6. Investment Judgment Questions
These questions test your ability to form and defend an investment thesis- the core skill of a VC investor.
Q: Pitch me a company you would invest in
Structure your answer: (1) Company overview, (2) Market opportunity and why now, (3) Product differentiation, (4) Team strength, (5) Traction to date, (6) Key risks and mitigants. Be prepared for pushback on every point.
Q: What is a sector you are excited about and why?
I am interested in vertical AI applications in regulated industries - healthcare, legal, financial services. The why now is clear: LLMs have crossed a capability threshold, but horizontal tools are not specialized enough for regulated workflows. The wedge is compliance - these industries will pay for AI that reduces regulatory risk. The moat comes from proprietary training data and workflow integration.
Q: Tell me about a company you passed on and regret
I passed on [Company X] because [specific concern]. In hindsight, I underweighted [what they got right] and overweighted [what I was wrong about]. The lesson I took away is [specific framework update]. Now I [how you have changed your approach].
Key: Show self-awareness and learning, not just regret.
Investment judgment questions have no right answer - they test your thinking process. Practice articulating your reasoning clearly.
Key Takeaways
Key Takeaway
- Market sizing: Use both top-down and bottom-up, then triangulate
- Startup evaluation: Team, Market, Product, Traction
- Unit economics: LTV:CAC greater than 3x, Payback under 12 months
- Power law: VCs need home runs, not base hits - 1 winner can return the fund
- Terms matter: Valuation is not everything - liquidation preferences, anti-dilution, and governance terms shape outcomes
- Process over answer: VCs test how you think, not what you conclude
Continue Your VC Interview Prep
Master these related topics to complete your VC preparation:
- Venture Capital Interview Questions Guide - Comprehensive VC interview overview
- TAM SAM SOM Market Sizing - Deep dive on market sizing frameworks
- How VCs Evaluate Startups - The evaluation framework in detail
- VC Portfolio Construction - Power law math and fund mechanics
- Startup Unit Economics - CAC, LTV, burn rate deep dive