VC Case Interview: Invest or Pass? (Mini Cases + Framework + Diligence Questions)
Master VC mini-case interviews with a repeatable invest-or-pass framework, IC memo template, and 4 realistic startup cases—plus the exact diligence questions that make you sound like a real investor.
Note
Module Reading: This article accompanies the VC Case Scenarios module in our Venture Capital interview prep track.
VC mini-cases are rarely about perfect spreadsheets. Interviewers want to see if you can form conviction with incomplete data, separate signal from noise, ask high-leverage diligence questions, and explain the return narrative.
A core reason is the power-law nature of venture outcomes: a small number of outliers drive most returns, so VCs optimize for asymmetric upside and "can this be huge?" more than "is this safe?".
What a VC Mini-Case Interview Tests
VC mini-cases are testing whether you can think like an investor under time pressure. Specifically, interviewers want to see if you can:
- Form conviction with incomplete data (and say what you'd verify next)
- Separate signal from noise (traction vs vanity, "why now" vs hype)
- Ask high-leverage diligence questions (the ones that change the decision)
- Explain the return narrative (how this can become a fund-returning outcome)
The VC Mindset
In venture, you can be "wrong" on most investments and still have a great fund—if you capture enough of the winners. This shapes everything: VCs optimize for outlier potential, not "average case" outcomes.
The "Invest or Pass" Framework (Use This in Every Case)
This framework is fast, repeatable, and interview-safe. Practice it until it's automatic.
A. 60-Second Screen (Say This Out Loud)
The 60-Second Screen
| Term | Definition | Note |
|---|---|---|
| 1) Company in one line | Who is it for + what pain + why better now | Forces clarity |
| 2) Why now | Timing tailwind (tech shift, regulation, behavior change, cost curve) | The unlock |
| 3) Wedge + ICP | First customer segment and entry product | Go-to-market clarity |
| 4) Evidence | 2–3 traction facts that matter (not vanity) | Signal vs noise |
B. 10-Minute Deep Dive (The 5-Bucket Scorecard)
Give each bucket a 1–5 score, then decide. This forces you to be systematic and provides a structure for your recommendation.
5-Bucket Scorecard
| Term | Definition | Note |
|---|---|---|
| 1. Market | Is it venture-scale? Is there a credible path to a huge outcome? | Crowded vs fragmented, winner-take-most dynamics |
| 2. Product | Clear differentiation + 'why this wins' | PMF signals or best leading indicators |
| 3. Go-to-Market | Who buys, why they buy, how you reach them | Sales cycle, pricing power, channel repeatability |
| 4. Team | Founder-market fit, rate of learning, ability to recruit | Clarity of thinking, pattern recognition |
| 5. Economics + Risk | Unit economics directionally make sense | Top 3 risks + mitigations + diligence plan |
A B2B SaaS startup shows €420k ARR growing 18% MoM with 82% gross margin and 118% NRR. Only 2 out of 38 customers have churned. What is the STRONGEST signal of product-market fit from this data?
C. 2-Minute Close (Clean Recommendation)
Finish with a structured recommendation:
The 2-Minute Close
| Term | Definition | Note |
|---|---|---|
| Decision | Invest / Pass / 'Invest if X is true' | Lead with the answer |
| 3 Reasons | The real drivers of your recommendation | Specific, tied to evidence |
| 3 Risks | The deal killers you're most concerned about | With mitigants where possible |
| Diligence Plan | 5 questions + 2 weeks plan | What you'd do Monday |
| Check Size + Ownership | High-level investment logic | Shows fund-level thinking |
Diligence Questions That Sound Like a Real Investor
The questions you ask reveal whether you understand what actually matters in venture investing. Here are the high-leverage questions by category:
Key Metrics by Business Model
Key Metrics by Business Model
| Term | Definition | Note |
|---|---|---|
| SaaS | ARR, ACV, gross margin, churn/retention, expansion, payback | Net revenue retention is king |
| Marketplace | GMV, liquidity, match rate, take rate, supply concentration, time-to-match | Liquidity metrics matter most |
| Consumer | Retention cohorts, engagement loops, CAC by channel, LTV assumptions | D7/D30/D90 retention curves |
A marketplace startup has €1.8M/month GMV, 18% take rate, and 1,200 SME customers. The top 30 customers represent 48% of GMV. What is the BIGGEST risk this concentration creates?
Mini Case 1 — B2B SaaS (Seed): "ClearLedger"
Case Setup: ClearLedger
Company: AI-powered audit workflows for mid-market accounting firms (not Big 4). Automates evidence collection + reduces review time.
Stage: Seed
ARR: €420k, growing 18% MoM (last 4 months)
Gross margin: 82%
Net revenue retention (early): 118%
Sales: Founder-led, 45–70 day cycle, ACV €12k
Churn: 2 logos lost (out of 38), both "too early / no budget"
You're evaluating a Seed-stage startup. The fund is €100M with 25 investments targeted. What MINIMUM exit value would this company need to "return the fund" (1x) on its own, assuming you own 15% at exit?
Mini Case 2 — Marketplace (Series A): "FlexFleet"
Case Setup: FlexFleet
Company: Matches last-mile delivery drivers with SMEs needing same-day deliveries in 8 cities.
Stage: Series A
GMV: €1.8M/month, take rate 18%
Supply: 14k drivers registered, 2.1k active weekly
Demand: 1,200 SME customers, top 30 are 48% of GMV
Unit economics: Contribution margin +6% after incentives (but volatile)
Key issue: On-time delivery rate drops below 90% at peak hours
15-Minute IC Memo Template
IC Memo Structure
| Term | Definition | Note |
|---|---|---|
| 1. Recommendation | Invest / Pass / Invest-if with one-sentence rationale | Lead with the answer |
| 2. One-Liner | Who/what/why now | Company in one line |
| 3. Market | Size + structure + 'winner path' | Is it venture-scale? |
| 4. Product | Differentiation + PMF signal | Why this wins |
| 5. GTM | How they acquire + why it scales | Channel + economics |
| 6. Metrics | 5 numbers that matter (model-specific) | Evidence, not vanity |
| 7. Risks | Top 3 + how to diligence | Deal killers |
| 8. Deal | Round, use of funds, ownership goal | Capital plan |
| 9. Next Steps | 2-week diligence plan | What you'd do Monday |
Common Mistakes (And How to Avoid Them)
Top 5 VC Case Interview Mistakes
| Term | Definition | Note |
|---|---|---|
| 1. Jump to 'Invest' without conditions | Say 'Invest if X' and name X clearly | Shows nuanced thinking |
| 2. Ask fluffy diligence questions | Ask questions that *change the decision* | High-leverage only |
| 3. Quote TAM without a wedge | Start with ICP + wedge + adoption path | Bottom-up, not top-down |
| 4. Over-index on vanity traction | Focus on retention, expansion, contribution, repeatability | Signal vs noise |
| 5. Ignore the 'could this be huge?' test | Tie to a power-law outcome narrative | VC is about outliers |
Key Takeaways
Key Takeaway
- Use the 60s → 10min → 2min framework: Screen quickly, score systematically, close cleanly
- Always lead with a recommendation: Invest / Pass / "Invest if X" in your first sentence
- Diligence questions should change decisions: Ask what you'd actually want to know, not generic questions
- Know the business model's key metrics: SaaS ≠ Marketplace ≠ Consumer
- Tie to the fund-returner question: Could this return the fund? Why?
- Show the VC mindset: Asymmetry, power law, ownership math, "why now"
- Practice makes it automatic: The framework should be second nature under time pressure
Related Reading
Continue building your VC knowledge:
- Venture Capital Interview Questions — Technical questions for VC interviews
- How VCs Evaluate Startups — The complete evaluation framework
- TAM SAM SOM Market Sizing — Interview-proof market sizing
- Unit Economics for Startups — CAC, LTV, Payback, Burn & Runway