Venture capital (VC) careers are competitive, with many more interested candidates than open positions. Subsequently, you should only consider a venture capital job after you have many years of successful, relevant, hands-on experience. Venture capitalist Guy Kawasaki put it best when he said, if you were the entrepreneur across the table, "Why would you want advice from someone whose background consists of working in a college bookstore or cranking spreadsheets at an investment bank?"

If you have the requisite background, preparing yourself for common questions will help you shine in your venture capital job interview. Many of the questions you can expect during a VC job interview are general in nature, but others are unique to the venture capital industry. Let's explore nine important industry-specific questions and how you should answer them. (To brush up on interview basics, read Taking The Lead In The Interview Dance and Tips To Beat Tough Interviews.)

1. Why do you want a job in venture capital? And, specifically, why did you want a job with our firm?
Before the interview, conduct extensive research on the firm to gain an intimate knowledge of the company and the industry that will distinguish you from other candidates. Your answer to this interview question should showcase this knowledge along with your general enthusiasm for investing in young companies (and not mention at all the significant compensation associated with it).

This is your opportunity to convey your passion for early-stage company activities. If your answer focuses on a love of spreadsheets, you can forget about getting to the next stage. Instead think of what about seedling companies gets you fired up. Project that energy and those points and you will connect with the interviewer. In addition, point out how the particular firm you're interviewing with fits into your desired career path and why your background would be ideal for this firm. (Read more about the relationship between an employee and their firm in Fitting In At Your Firm.)

2. What are some recent developments in our industry?
Venture capital firms seek employees with proven expertise, often in a particular industry in which the firm focuses. You should not only showcase your knowledge of the overall developments and trends in the industry, but also elaborate on the specific influences currently affecting the market. Demonstrate knowledge that only an experienced industry insider would have. Discussing a particular company's product release or strategic decision would be a great method to do exactly that. (Read more about how companies differentiate themselves from the competition in Competitive Advantage Counts.)

3. What has been the most interesting IPO or acquisition in our industry in the past 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 it could strengthen its market position. Treat 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 proving to clients you understand their field and where they can go post-acquisition. (For related reading, see The Murky Waters Of The IPO Market.)

4. What blogs/columns do you read?
The venture capital world is a highly connected one where networking is key - especially if you are trying to bring new deals to the table. Subsequently, some prominent venture capitalists publish personal blogs highlighting their perspectives on recent deals, upcoming IPOs and general industry commentary. Reading these blogs can give you insight into the current thinking and new developments in the industry. Staying in tune with the blog conversations shows the interviewer that you are highly connected and have your finger on the industry pulse. (Read more about how traders interact online in Taking A Trip To Trader Town: Exploring The Trader's Chatroom.)

5. Where do you see yourself in five years?
While this is a question that an interviewer in any industry would ask, at a venture capital job interview, you should answer this question by stating your intention to eventually become a general partner of the firm. You want to give the impression that you are a dedicated individual who seeks long-term commitments. Explain that you will earn your promotions by letting the results of your work speak for themselves. Be ready to answer the follow-up question, "What results can we expect from you?" and use a professional success story to illustrate what you bring to the table.

6. How would you evaluate a possible portfolio company and its business plan?
Emphasize your ability to look beyond the numbers and read between the lines. Evaluating financial facts is much different than forecasting revenue potential. In an early-stage investment, two things will make the difference between success and failure: seasoned management and sales potential. Understanding how to effectively evaluate the leadership of the company and the reality of its market demand is crucial. The key to any venture capital investment is the prospects of the market. (To learn what you should expect from a successful management team, read Evaluating A Company's Management.)

This understanding should be central to your response. Tailor your answer to showcase how your experience and successes have developed your ability to project demand and forecast sales. If you have accomplishments where you developed a nascent concept into a market success, make sure to discuss how those experiences lend well to a venture capital career. (For related reading, check out Great Expectations: Forecasting Sales Growth.)

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 showcases exactly how your skills would help you overcome the obstacles and challenges that arise in a venture capital career. If you were involved with a start-up organization that floundered, use that experience to showcase how your leadership turned the situation around, or explain the lessons you learned from that experience. (Remember, we tend to learn more from our mistakes than from our successes.) Discuss how your company released 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 an eventual success. (For related reading, see Learning From Others' Mistakes.)

8. What industries are of greatest interest to you?
Venture capital firms tend to be highly specialized, and your answer must reflect that specialization. One way to distinguish yourself is to propose complementary niches to the firm. The company may disagree 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 toward impressing your interviewer.

9. What have you personally invested in?
A venture capitalist makes a living putting his money where his mouth is, so the interviewer will expect that you should, too. Taking calculated risks for the potential long-term reward is an important characteristic to demonstrate. Show that your brokerage account shines with holdings in the industry's best and brightest companies - and that you placed them into your stock portfolio long before the general investing public got 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.

The Parting Shot
The end of the interview represents the final opportunity to differentiate yourself from the competition. Focus on asking questions about the current activities of the firm not previously brought up in the interview process. Demonstrate your understanding of the firm's specialties and be sure to ask what they are looking for in a candidate and how well you measure up to that standard. This is known as "closing the deal," and you should never leave an interview without a strong close.

If you've landed a venture capital job interview, being prepared for these questions should put you on solid ground. Do your homework, and you'll be one step closer to the offer you are looking for.

For further reading, see Seek An Adventure In Venture Capital and Cashing In On The Venture Capital Cycle.

Related Articles
  1. Active Trading Fundamentals

    The 4 Biggest Private Equity Firms in London

    Discover information about the largest private equity firms that are headquartered in London, ranked by total assets under management.
  2. Retirement

    Retirement Planning for Entrepreneurs and Small Businesses

    If your business has receiveables, here's a smart way to leverage them to build up your retirement fund fast.
  3. Investing News

    Equity Crowdfunding Sites Disrupt Banking and VC

    Equity crowdfunding is poised to revolutionize the way companies are funded and disrupt the traditional private equity, banking and venture capital industries.
  4. Charts & Patterns

    Understand How Square Works before the IPO

    Square is reported to have filed for an IPO. For interested investors wondering how the company makes money, Investopedia takes a look at its business.
  5. Entrepreneurship

    World's Top 10 Serial Entrepreneurs

    There are entrepreneurs, and then there are serial entrepreneurs. Investopedia takes a look at who they are and how they keep making it big.
  6. Investing

    The 8 Best Business and Finance T.V. Shows

    With so many talking heads to choose from, which is the right show for your business and money matter needs? We review the best shows on now.
  7. Personal Finance

    How To Get That Entry-Level Financial Analyst Job

    Landing a job as a financial analyst takes study, strategy and a lot of hard work. Here's how to hone your competitive edge.
  8. Active Trading Fundamentals

    The Biggest Private Equity Firms in San Francisco

    Learn about some of the larger private equity firms with a presence in San Francisco, including KKR, the Blackstone Group and Warburg Pincus.
  9. Active Trading Fundamentals

    The Companies of Peter Theil's Founders Fund

    Learn about the major public companies that Peter Thiel has invested in and companies that are on the verge of going public at multibillion-dollar valuations.
  10. Active Trading Fundamentals

    The Biggest Private Equity Firms in Los Angeles

    Learn why Los Angeles is a thriving market for private equity, and identify the five largest private equity firms operating in the city.
RELATED TERMS
  1. Venture Capitalist

    An investor who either provides capital to startup ventures or ...
  2. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
  3. Per Transaction Fees

    An expense a business must pay each time it processes a customer’s ...
  4. Operating Cost

    Expenses associated with administering a business on a day to ...
  5. Path To Profitability (P2P)

    A clearly defined route to profitability as described in a business ...
  6. Freelancer

    A freelancer is an individual who earns money on a per-job or ...
RELATED FAQS
  1. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  2. What kind of assets can be traded on a secondary market?

    Virtually all types of financial assets and investing instruments are traded on secondary markets, including stocks, bonds, ... Read Full Answer >>
  3. How do you find the break-even point using a payback period?

    It does not make sense to find the breakeven point using a company's payback period. A company's payback period is concerned ... Read Full Answer >>
  4. What does residual value represent in a private equity investment?

    It is common to see a private equity investment's net asset value, or NAV, referred to as its residual value, since it represents ... Read Full Answer >>
  5. Why would a company decide to utilize H-shares over A-shares in its IPO?

    A company would decide to utilize H shares over A shares in its initial public offering (IPO) if that company believes it ... Read Full Answer >>
  6. What is considered a reasonable interest rate for a syndicated loan?

    A 2010 survey of syndicated loans found an average interest rate of 7.9%. However, the majority of syndicated loans are floating ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!