Venture Capital Interview Questions: Complete 2025 Guide
Master VC interview questions with our comprehensive guide. Covers market sizing, startup evaluation, deal terms, and case studies with interactive practice.
Venture capital interviews are unique—they emphasize qualitative judgment, market intuition, and the ability to evaluate founders and markets. This guide covers the key question types with interactive practice to test your understanding.
Why VC Interviews Are Different
Unlike PE or IB interviews that focus on modeling and returns, VC interviews emphasize pattern recognition, market intuition, and the ability to identify outliers. You need to think in probabilities, not certainties—understanding that most investments fail but winners can return the entire fund.
The VC Mindset
How VCs Think Differently
Unlike PE or IB, VCs:
- Accept that most investments will fail (power law)
- Look for 10x+ returns, not 2-3x
- Prioritize market size and founder quality over current financials
- Invest in potential, not proven cash flows
Test Yourself
Interview Question
A VC fund invests $1M each in 10 companies. 7 fail (0x), 2 return 2x, and 1 returns 20x. What is the fund's overall MOIC?
Understanding the power law is fundamental to VC. This is why VCs take risks that seem crazy to PE investors—they're playing a different game with different math.
Market Sizing Questions
Market sizing is one of the most common VC interview questions. VCs need to know if a startup is going after a big enough opportunity to generate venture-scale returns. Master the TAM/SAM/SOM framework and practice bottom-up calculations. For a deep dive into the framework with 10+ examples, see our complete market sizing guide.
Test Yourself
Interview Question
A startup targets US households earning $100K+. There are 130M US households, 35% earn $100K+, and the product costs $200/year. What's the TAM?
Startup Evaluation Questions
Unit Economics Questions
VCs obsess over unit economics because they indicate whether a business model can scale profitably. The key metrics are LTV (Lifetime Value), CAC (Customer Acquisition Cost), and the LTV:CAC ratio. You must be able to calculate these quickly in interviews. For comprehensive coverage of these metrics with real-world examples, check our startup unit economics guide.
Key Unit Economics Metrics
| Term | Definition | Note |
|---|---|---|
| CAC | Customer Acquisition Cost | Cost to acquire one customer |
| LTV | Lifetime Value | Total gross profit from a customer |
| LTV:CAC | Ratio of lifetime value to acquisition cost | >3x is good, >5x is excellent |
| Payback Period | Months to recover CAC | <12 months ideal, <18 acceptable |
| Gross Margin | (Revenue - COGS) / Revenue | 70%+ for SaaS, varies by model |
| Churn Rate | % customers lost per period | <5% monthly for SaaS is good |
Test Yourself
Interview Question
A SaaS startup has $100 CAC, $50/month subscription, 70% gross margin, and 5% monthly churn. What is the LTV:CAC ratio?
Common Mistake: Revenue vs Gross Profit
Many candidates calculate LTV using revenue instead of gross profit. This is wrong! LTV must use gross profit because you have to deliver the product/service (COGS). A SaaS company with $100/month revenue and 70% gross margin only generates $70/month in gross profit—use $70 for LTV calculations.
Deal Terms & Mechanics
While VC interviews are less technical than PE interviews, you still need to understand basic deal terms and how they affect founders and investors. Focus on preferred stock, liquidation preferences, anti-dilution, and down rounds. Learn more in our VC term sheet basics guide.
Fit & Motivation Questions
Key Preparation Areas
VC Interview Prep Checklist
| Term | Definition | Note |
|---|---|---|
| Market Sizing | Practice 5-10 different markets | TAM/SAM/SOM framework |
| Investment Pitches | Prepare 2-3 companies you'd invest in | Know metrics deeply |
| Unit Economics | LTV, CAC, payback, margins | Quick mental math |
| Term Sheets | Basic terms and their implications | Preferred stock, liquidation preference |
| Portfolio Thinking | Understand power law returns | How VC fund math works |
| Startup News | Follow TechCrunch, The Information | Stay current on trends |
Key Takeaways
Key Takeaway
- VC is about pattern recognition and qualitative judgment, not just modeling
- Master the power law: Most investments fail, winners return the fund—this changes everything
- Market sizing is essential: Practice bottom-up TAM/SAM/SOM calculations until automatic
- Know unit economics cold: LTV, CAC, payback, margins—be able to calculate quickly
- Have investment theses ready: 2-3 startups you'd back with clear reasoning and risk awareness
Continue Your VC Interview Prep
Master these related topics to complete your VC interview preparation:
- TAM SAM SOM Market Sizing — Complete framework with 10+ market sizing examples
- Startup Unit Economics — Deep dive into CAC, LTV, payback, burn rate, and runway
- How VCs Evaluate Startups — The actual investment framework top VCs use
- How VCs Evaluate Founders & Product — Founder-market fit, moats, and traction signals
- VC Term Sheet Basics — Dilution, liquidation preferences, and pro-rata rights
- VC Case Interviews — Invest or pass decision frameworks with practice cases
- Top 30 VC Interview Questions — Comprehensive list with model answers