Venture capital (VC) career competition is fierce, and there are more interested candidates than vacancies. You should only consider venture capital work after you have many years of successful, relevant, and practical experience.
Venture capitalist Guy Kawasaki put it best. He said he imagined saying the following to the entrepreneur across the table: “Why do you have a background including working in a university bookstore or making spreadsheets in an investment bank? Of people looking for advice?”
If you have the necessary background, preparing for common questions will help you shine in your venture capital job interview. In a VC job interview, many of the questions you may encounter are generic in nature, but other questions are unique to the venture capital industry. Below, we will explore nine important industry-specific questions and how you should answer them.
According to data from the National Venture Capital Association (NVCA), the number of venture capital assets (AUM) under management in the United States in 2020 is a record year for the industry.
1. Why do you want a venture capital job? And, specifically, why do you want to work in our company?
Before the interview, conduct extensive research on the company to gain an in-depth understanding of the company and the industry, which will set you apart from other candidates. Your answer to this interview question should show your knowledge and your general enthusiasm for investing in young companies (but don’t mention the huge salary associated with it).
This is your chance to express your enthusiasm for the company’s early activities. If your answer focuses on the love of spreadsheets, you can forget to move on to the next stage. Instead, think about how a seedling company excites you. Project that energy and those points, and you will connect with the interviewer. In addition, point out how the particular company you interviewed for fits your ideal career path, and why your background fits this company.
2. What are the recent developments in our industry?
Venture capital companies seek employees with mature expertise, usually in a particular industry the company focuses on. You should not only show your understanding of the overall development and trends of the industry, but also detail the specific impact that currently affects the market. Demonstrate knowledge that only experienced industry players can have. Discussing the product launch or strategic decision of a particular company would be a good way to achieve this goal.
3. What was the most interesting IPO or acquisition in our industry in the past year?
This question provides ample opportunities for you to shine. Research the ins and outs of initial public offerings (IPOs) related to the niche interests of venture capital firms and prepare your analysis. Discuss the potential of the company you see and how it can strengthen its market position. Think of this question as a test of your industry knowledge and an opportunity to impress the interviewer through thoughtful analysis.
This research will also help you later prove to your customers that you understand their field and where they can go after the acquisition.
4. Which columns/blogs do you read?
The world of venture capital is a highly connected world where the network is the key, especially when you are trying to bring new deals. Some well-known venture capitalists publish personal blogs or columns, highlighting their views on recent transactions, upcoming IPOs and general industry reviews.
Reading such materials can give you an in-depth understanding of current thinking and new developments in the industry. Be consistent with this type of conversation and show the interviewer that you are well connected and know the pulse of the industry.
5. Where will you be after five years?
Although this is a question that interviewers in any industry will ask, in a venture capital job interview, you should answer this question by stating your intention to eventually become a general partner of the company. You want to give the impression that you are a dedicated person seeking long-term commitment. Explain that you will be promoted by making the results of your work self-evident, and be ready to answer this follow-up question: “What can we get from you?”
You can also use professional success stories to illustrate what you brought.
According to the National Venture Capital Association (NVCA), by the end of 2020, there are approximately 1,965 venture capital companies in the United States.
6. How would you evaluate possible portfolio companies and their business plans?
Emphasize your ability to go beyond numbers and read between the lines. Evaluating financial facts is very different from predicting revenue potential. In early investment, two things will determine success or failure: experienced management and sales potential. Understanding how to effectively evaluate the company’s leadership and the reality of market needs is crucial. The key to any venture capital is the market outlook.
This understanding should be the core of your response. Customize your answers to show how your experience and success develop your ability to predict demand and predict sales. If you have achieved success in developing new concepts into market success, be sure to discuss how these experiences can well promote venture capital.
7. Tell me your most challenging career experience.
This is a good opportunity to make a lasting impression-make good use of it. Choose an experience from your resume that accurately demonstrates how your skills can help you overcome obstacles and challenges in your venture capital career.
If you are involved in a troubled startup organization, use that experience to show how your leader turned things around, or explain the lessons you learned from that experience. (Remember, we tend to learn more from mistakes than from success.) Discuss how your company releases products or services that underperform in initial market tests and how you can use this information to create Alternative uses or functions, thereby driving the ultimate success.
8. Which industries are you most interested in?
Venture capital firms are often highly specialized, and your answer must reflect this specialization. One way to differentiate yourself is to propose complementary niches to the company. The company may not agree with your suggestion, but if you can provide a convincing reason for your suggestion, you will show industry insight and creativity, which will greatly impress your interviewers.
9. What did you personally invest in?
Venture capitalists make a living by putting money on their lips, so interviewers will expect you to do the same. Taking calculated risk for potential long-term returns is an important feature to prove. Show that your brokerage account shines because of holding the best and smartest companies in the industry, and put them in your stock portfolio long before the general investment public is hyped. The venture capital industry focuses on the value-added of start-ups and early-stage development companies, so it is important to emphasize your investment in companies related to the specific profession of the company you are interviewing.
Many of the questions raised in venture capital interviews are similar to those that applicants will be asked in interviews in any field, such as: How will you see yourself in five years? Others are more specific, for example: What did you personally invest in?
The end of the interview represents the last chance to differentiate yourself from the competition. Focus on asking questions about the company’s current activities that have not been mentioned in the interview before. Demonstrate your professional understanding of the company, and be sure to ask about their needs for candidates and how well you meet that standard. This is the so-called “closing a deal” and you should not leave the interview without a strong end.
If you have already gotten a job interview for venture capital, then preparing for these questions should give you a solid foundation. Do your homework and you will be one step closer to the offer you are looking for.