Venture capital (VC) careers are competitive, with many more interested candidates than open positions. You should only consider a venture capital job after you have had many years of successful, relevant, hands-on experience.
Venture capitalist Guy Kawasaki put it best when he said that he imagines saying the following to an 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. Below, we'll 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 (but do not mention 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 Tips for Fitting in at Your Brokerage 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.
4. What columns/blogs 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. Some prominent venture capitalists publish personal blogs or columns highlighting their perspectives on recent deals, upcoming IPOs and general industry commentary.
Reading such material can give you insight into the current thinking and new developments in the industry. Staying in tune with such conversations shows the interviewer that you are highly connected and have your finger on the industry pulse.
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, and be ready to answer this follow-up question: "What results can we expect from you?"
You can also 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.
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're looking for.