how to do a vc case study

Venture Capital Case Study Interview Guide

If you’re a prospective venture capitalist or seeking to enter the exciting world of venture capital, you’re probably familiar with the importance of case study interviews.  Venture capital firms  are keen to identify the best candidates who understand their approach and have the necessary skills to work alongside entrepreneurs.

In this comprehensive guide, we will cover everything you need to know to ace your  venture capital case study  interview. We’ll provide insights into the venture capital  interview process  and discuss the most common interview questions. We’ll also share our tips on how to prepare and master case studies, analyze industry trends, and navigate  technical questions  and  financial modeling  exercises.

Key Takeaways

• Successful  venture capitalists  need an in-depth understanding of the industry and current  market trends .
• Case study interviews are designed to test your analytical and problem-solving skills and your ability to work with teams and entrepreneurs.
• Some of the most  common venture capital interview questions  are aimed at evaluating your fit for the role and the firm.
• Valuation  and  investment thesis  play a crucial role in venture capital decision-making.
• Thorough preparation, including studying sample questions and frameworks, is essential for success in  VC case study  interviews.

Understanding the Venture Capital Interview Process

Before diving into case study interviews, it is essential to have a comprehensive understanding of the venture capital  interview process . The process typically begins with an initial screening, where the candidate’s qualifications and skills are assessed. If the candidate passes the initial screening, the firm may conduct a follow-up interview, which may be conducted by a more senior member of the team.

In some cases, firms may also require candidates to complete an assignment or provide a writing sample. Following this round of interviews, successful candidates are invited to participate in final rounds, which may involve meetings with additional members of the team or a more in-depth panel presentation.

One of the key components of the venture capital  interview process  is the ability to effectively articulate your thoughts and ideas. Strong communication skills, including the ability to present complicated information clearly and succinctly, are essential for success in this industry. Additionally, candidates should be prepared to demonstrate their analytical skills, their understanding of industry trends, and their ability to work collaboratively as part of a team.

When  preparing for a venture  capital interview, it is essential to research the firm thoroughly and familiarize yourself with their investment philosophy, portfolio companies, and recent activity. A strong understanding of the firm’s focus areas and investment strategy can help you tailor your responses to their specific needs and increase your chances of success.

VC Interview Questions

VC interview questions  are designed to assess a candidate’s fit with the firm and their qualifications for the role. Common  VC interview questions  may include:

• Why do you want to work in venture capital?
• What do you think differentiates our firm from other  venture capital firms ?
• Can you discuss a deal you found particularly interesting and why?
• How would you value a company?
• What are some current industry trends?

By understanding the  venture capital interview  process and preparing thoroughly, you can increase your chances of success in this highly competitive industry.

Preparing for a Venture Capital Case Study Interview

Preparation is key to delivering a standout performance in a  venture capital case study  interview. Developing an effective strategy requires thorough research and practice. Here are some tips to help you prepare:

Research the VC Firm

Start by researching the  VC  firm you will be interviewing with. This will provide insights into their investment focus, ethos, and portfolio companies. Analyse their website, social media accounts, news articles, and other sources of information. This will help you understand the firm’s investment criteria and identify areas where you can align your background and experience with their interests.

Practice With Case Studies

Case study interviews are a crucial part of the  venture capital interview  process. Practise with mock case studies and analyse how successful  VC funds  have invested in real-world scenarios. This will enhance your analytical abilities and problem-solving skills, bringing you closer to the mindset of a  VC  analyst or associate.

Be Prepared to Frame Your Approach

In a  venture capital case study  interview, there is often no one “right” answer to a problem. Interviewers are more interested in your analytical approach and thought process. They want to see that you have the skills to break down complex problems and communicate your thinking in a clear and concise manner.

Be prepared to frame your approach by breaking down the problem, identifying key assumptions, and narrowing in on the key issues. Developing a structure can help ensure your analysis is comprehensive and well-organized.

Be Ready for Technical Questions

VC  interviews often include questions about technical topics related to venture capital and finance. Brush up on key concepts such as  valuation , term sheets, and financial modelling. This will allow you to discuss these topics articulately during the interview and showcase your expertise in the field.

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

By following these strategies, you will be better prepared to tackle a  venture capital case study interview . Remember to keep calm, stay focused, and communicate your thoughts clearly and logically. Always be ready to justify your assumptions and pivot your approach based on new information provided during the interview.

Common Venture Capital Interview Questions

In order to prepare for your  venture capital interview , it’s crucial to have an understanding of the common questions that may be asked. These questions are tailored to evaluate your fit for the role and the firm.

Specific Questions

One common question focuses on your experience as it relates to the venture capital industry. Interviewers often want to know how you’ve gained knowledge and what relevant experiences you’ve had. Another question centers around what value you could bring to the firm and whether you have any specific expertise that would be beneficial to their investment strategy.

Interviewer Expectations

Interviewers are looking  for candidates who have a strong understanding of the industry and the firm’s investment focus. They want to see evidence of strong analytical skills, critical thinking, and an ability to identify and capitalize on excellent investment opportunities. Additionally, they look for candidates who are adaptable and can work collaboratively within the firm.

“One common question centers around what value you could bring to the firm and whether you have any specific expertise that would be beneficial to their investment strategy.”

Mastering the Case Study Interview

During a  venture capital case study interview , the interviewer typically presents a business case related to the industry or market to assess your analytical, problem-solving, and communication skills. A  case study interview  is your opportunity to showcase your ability to analyze a problem or situation, evaluate potential solutions, and develop a coherent and persuasive argument.

Preparing for a  case study interview  involves understanding the case study methodology and identifying the key elements of the problem to solve. Generally, case study interviews follow a structured format:

• The interviewer presents the case study, along with any relevant background information and data.
• You have time to review and analyze the case study before presenting your analysis and proposed solution(s).
• You present your analysis and proposed solution(s) to the interviewer.
• The interviewer may ask follow-up questions to test your assumptions, methodology, and problem-solving skills.

To succeed in a  case study interview , it’s crucial to follow a structured approach and demonstrate a thorough understanding of the problem and its context. In addition, your analysis should be supported by credible data and logical reasoning.

One effective framework for structuring your case study analysis is the “Issue-Tree” method.

Issue-Tree Method

The issue-tree method involves breaking down a complex problem into smaller, manageable components, and identifying the cause-and-effect relationships between them. The framework allows you to analyze the problem systematically and develop a clear, structured argument.

As shown in the table, the issue-tree method involves identifying the problem, breaking it down into smaller “causes” and developing “hypotheses” for each cause. You then gather relevant “data” to test each hypothesis, and derive “conclusions” based on the data.

Remember to emphasize your communication and presentation skills during the interview. You should be able to present your analysis and solution(s) in a clear, concise, and persuasive manner.

Understanding the Venture Capital Industry and Market Trends

Having a deep understanding of the venture capital industry and staying on top of the latest  market trends  can give you a significant advantage in a case study interview. The venture capital industry is driven by  venture capital firms  and  venture capitalists  who invest in startups with high growth potential in exchange for equity.

According to Pitchbook, venture capital firms invested over £10 billion in the UK in 2020, despite the challenges posed by the pandemic. While the first quarter of 2021 saw a decline in venture capital investment, due to uncertainty related to Brexit and the pandemic, the industry rebounded in the following months.

It’s important to stay up-to-date with  market trends  to understand which industries and sectors are currently receiving the most investment, such as healthcare, fintech, and sustainability. By keeping tabs on market trends, you can develop a perspective on where the industry is headed and which startups are most likely to succeed.

“The key players in the industry include Accel, Sequoia Capital, Index Ventures, and more. It’s crucial to research these firms and the types of startups they specialize in, in order to tailor your preparation for your interview.” – Jonathan Davies,  VC Associate

Valuation and Investment Thesis in Venture Capital

Valuation  and  investment thesis  play a crucial role in making sound venture capital investments. Before investing in a startup,  venture capitalists  need to determine its valuation and align it with the firm’s  investment thesis . Valuation is the process of determining a company’s worth based on its assets, market potential, and future growth prospects. A startup’s valuation can also be influenced by market trends and competition.

Venture capitalists develop investment theses to guide their investment decisions. An investment thesis is a set of criteria that a startup must meet to be considered for investment. Factors such as industry, market potential, management team, and technology can influence a venture capital firm’s investment thesis. The investment thesis also shapes the firm’s portfolio and helps attract investors to its  VC funds .

When considering investment opportunities, venture capitalists need to ensure that a startup’s vision aligns with the firm’s investment thesis. Investing in a startup that does not align with the firm’s investment thesis could lead to strategic misalignment and poor returns.

Valuation Methodologies

Venture capitalists use various methodologies to value startups. The most common valuation method is the discounted cash flow (DCF) analysis. The DCF method involves estimating a startup’s future cash flows and discounting them back to their present value.

Another commonly used valuation method is the market-based approach, which compares a startup’s valuation to that of similar companies in the market. The market-based approach involves using multiples such as price-to-earnings ratio (P/E ratio) or price-to-sales ratio (P/S ratio) to determine a startup’s valuation.

Factors to Consider in Developing an Investment Thesis

Developing a sound investment thesis requires careful consideration of various factors. These include the target industry, stage of the startup, management team, competition, and market potential. A thorough understanding of these factors can help venture capitalists make informed investment decisions.

Navigating Technical Questions and Financial Modeling

Technical questions  and  financial modeling  are crucial components of a  venture capital case study interview  that test your analytical and strategic thinking skills. As a  VC associate , you’ll be expected to evaluate startups, assess market opportunities and risks, and develop investment strategies that align with your firm’s vision.

Here are some tips for approaching  technical questions  and  financial modeling  exercises:

• Understand the problem:  Read the case study carefully, and make sure you understand the goals, constraints, and relevant data points.
• Organize your thoughts:  Create a logical outline or framework for your analysis, and break down complex problems into smaller, manageable parts.
• Use data wisely:  Use financial models, graphs, and other visual aids to communicate your findings and support your arguments.
• Be flexible:  Be open to new ideas, alternate solutions, and different perspectives. Venture capital is an ever-changing industry, and being adaptable is key.

Here are some common types of technical questions and financial modeling exercises:

To prepare for technical questions and financial modeling exercises, try practicing with sample case studies and reviewing industry reports and market research. Build your analytical toolkit with courses, books, and online resources, and stay up-to-date on the latest trends and technologies in the venture capital industry.

With this comprehensive guide, you are now equipped with all the necessary tools and insights to succeed in your venture capital case study interview. Remember to understand the interview process, thoroughly prepare for the case study interview, and master the common interview questions. It’s also important to stay up-to-date with industry trends and understand the valuation and investment thesis process. Finally, be confident in navigating technical questions and financial modeling exercises. Good luck with your venture capital interview!

What is a venture capital case study interview?

A venture capital case study interview is an interview format commonly used by venture capital firms to assess a candidate’s ability to evaluate investment opportunities. It typically involves analyzing a hypothetical or real-life investment scenario and presenting recommendations based on your analysis.

How should I prepare for a venture capital case study interview?

To prepare for a venture capital case study interview, familiarize yourself with the industry and its trends, practice analyzing case studies, and develop a structured approach to problem-solving and decision-making. You should also be comfortable with financial modeling, valuation techniques, and presenting your findings in a clear and concise manner.

What are some common venture capital interview questions?

Common venture capital interview questions  include inquiries about your investment thesis, previous investment experience, knowledge of the industry, and how you would evaluate a potential investment opportunity. Interviewers may also ask behavioral questions to assess your ability to work in a team and overcome challenges.

How do I demonstrate my industry knowledge in a venture capital interview?

To demonstrate your industry knowledge in a venture capital interview, stay updated on market trends, follow industry blogs and news outlets, and research the investment portfolios and strategies of the venture capital firms you are interviewing with. Being able to articulate your understanding of industry dynamics and align it with the firm’s investment thesis will make a strong impression.

What should I expect during a venture capital case study interview process?

During a venture capital case study interview, you can expect to receive a case study prompt or scenario, analyze the given information, and present your recommendations. The interviewers may ask you clarifying questions, challenge your assumptions, and assess your ability to think critically and make sound investment decisions.

How can I best showcase my analytical skills in a venture capital case study interview?

To showcase your analytical skills in a venture capital case study interview, demonstrate a structured approach to problem-solving, use relevant financial models or frameworks to support your analysis, clearly articulate your assumptions, and explain the rationale behind your recommendations. It’s also important to communicate your findings in a concise and persuasive manner.

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The Types of Growth & VC Case Studies

While over 500 people applied to our latest growth equity associate position, with many having strong pedigree, their ability to think creatively has been highly disappointing. For example, we asked candidates to send over the names of two to three companies they think we should invest in, and (1) most applicants sent over startups that didn’t align with our mandate (think of startups raising their Series D versus Series A/B) and (2) every applicant only sent over two or three companies, when the real test was to see who would think differently and go beyond our simple task

My friend at an up-and-coming venture capital firm ranted to me the above, saying that finding quality candidates had proven to be a struggle. Consequently, his firm usually just extended offers to the candidates with the most prestigious background.

Upon hearing his grievances, I wanted to shed light on how candidates can better position themselves for positions within growth equity and venture capital.

Table of Contents

1. initial screening cases, what is a common theme you see across our portfolio, send 2-3 companies we should invest in. why should we invest in these companies, what industry / category do you find the most compelling to invest in, 2. short-form cases, growth equity modeling, 3. long-form cases.

Size & Forecasting Total Addressable Market

Estimating Unit Economics

4. additional resources, useful content, initial screening cases.

This question is often used as part of the initial screen to ensure that the candidate has done their research about the firm’s portfolio.

While this question may appear easy at first glance, what will likely make it difficult is the lack of information available on the firm’s portfolio, given all the companies will be small and private.

While you can focus on whether the firm’s companies all reside within the same industry, geography or investment size, a way to display further depth of knowledge is to elaborate on the underlying business models of the portfolio companies.

Example business models ( Source ):

• Freemium – Google Drive, iCloud and Slack

• Subscription – Netflix, Spotify and Tinder

• Marketplace – Amazon, Fiverr and Etsy

• Aggregator – Uber, Airbnb and Google

• Fee-for-Service – Stripe, PayPal and Ayden

• API Licensing – Twilio, SendGrid and Google Maps API

• Advertising – Facebook, Twitter and TikTok

• And many others

Being able to display knowledge of the firm’s portfolio companies down to the business model will be highly impressive, as most candidates are likely to give high level generic answers.

Introduce investors to new companies – start sourcing. The beauty of venture capital is that you can become an investor in your dorm room. If you can introduce me to one company that I end up investing in, odds are I’m going to hire you. If you introduce me to three companies that are worth second meetings, even if I didn’t invest in any of them, you have a real shot at getting hired. Because this is hard to do, and if you can demonstrate that you’re willing to do the work and source companies that are worth my time – I’ll take it very seriously ‍ – Ashu Garg, Foundation Capital

As a junior employee at a venture or growth equity firm, you’ll spend a significant amount of time sourcing.  As such, firms want to gauge your ability to find high-quality companies that seriously merit investment.

While it might be tempting to just send over the name of the first two or three companies you find online that seem promising, to truly stand out you’ll need to go a step further. For example, if you’re serious about recruiting for a position in growth or vc, you should be attending demo days from accelerator, beta testing products or anything else that helps you gain exposure to high caliber entrepreneurs and their companies. If you start doing this for a year or two, you should begin to gain a feel for a certain market segment and the companies that seem to be doing well in those markets. After going through this process, you should be able to come up with a list of two or three companies that you believe are a compelling investment.

Additionally, you should try to align the companies you send over with the firm’s investment mandate (i.e., don’t send over a Series D stage company to a firm that focuses on Series A)

• Techstars

• Gener8tor

This is very similar to the previous question; except you’ll be focused on an entire market instead of individual startups.

You should still go through the motions described above (networking to meet founders, beta testing products, etc.), however, you’ll need to position your answer to this question to create a compelling case for the market.

As mentioned above, you should calibrate your answer to this question based on the firm’s mandate. For example, if you were interviewing with a firm that specializes in financial technology, you should select an emerging market segment within the realm of fintech.

Short-Form Cases

Relative to every other portion of this article, the growth equity modeling cases will be the most standardized aspect of an interview. Note that this is specifically called “growth equity” modeling because it is unlikely that a venture capital firm will give out a modeling test.

If you do receive a growth equity modeling exam, it will be very similar to what you’d receive during a typical corporate private equity interview, meaning you’ll like build either a two or three statement model with equity return sensitivities. However, the following are a few specific features that might appear in a growth equity modeling exam:

Liquidation Preference

A liquidation preference is an instrument typical in early-stage growth investments, whereby a new investor is guaranteed a minimum return on their investment at exit. The liquidation preference is junior to all debt-like instruments in the capital structure, but effectively ranks senior to ordinary equity.

Primary vs. Secondary Equity Investment

Primary equity involves the issuance of new equity by the company, thereby increasing the company’s equity value. A secondary equity transaction involves the purchase of existing shares from current investors in the business, and therefore does not increase the equity value of the company.

An example of this type of case study is UK Unicorn , which was given out by Vitruvian Partners.

Long-Form Cases

Sizing & forecasting total addressable market.

This case type is self-explanatory, the candidate is tasked with quantifying the total addressable market ("TAM") for a startup.

The actual case prompt for this type of question is usually fairly sparse, as the candidate will likely only receive details on what market they should try to size and forecast. For example, see below for an excerpt from a case study given by DST Global :

Please size and forecast the addressable market for this startup in terms of a) gross annual consumer spend in segments that are addressable today and 5 years from now e.g. of the $xbn spent by consumers on restaurants annually what segments/portions are addressable b) what portion is and will be sold through online channels c) What could the size of the cloud kitchen market be on standalone basis…

An example of why this matter is because the TAM will serve as a key constraint to the potential value of a startup. A good example of this is Aswath Damodaran’s article why Uber’s fundamental value wasn’t $17 billion back in 2014 ( link ). Upon reflection, we can conclude that Damodaran’s valuation of $5.9 billion for Uber ended up being wrong, evidenced by Uber’s current equity value of ~$60 billion (April 2023). This is not a critique of Damodaran’s work, which is reasonable, but is instead an example of underestimating the TAM for a given company. In his article, Damodaran assesses Uber’s potential value based on its potential to capture market share from the existing taxi market. However, he does not include potential value Uber could derive from other segments, such as food delivery or freight. To be fair, those segments hadn’t been entered by Uber yet and were still nascent markets, so it makes sense why Damodaran hadn’t considered them in his analysis. However, this does show the importance of considering additional categories when calculating the TAM for a given startup.

Unit economics are another key metric that growth equity investors and VCs focus on. Essentially, they want to ensure that ever unit sold is contributing gross profit into the business. Similar to Sizing & Forecasting TAM prompts, questions requesting the candidate to calculate unit economics will usually be very high-level in nature. The below excerpt is pulled from the aforementioned Cloud Kitchens case from DST:

Please outline what the hypothetical unit economics / P&L structure for an individual cloud kitchen will be for…

What makes this a difficult prompt is its open ended nature, as there isn't a straightforward way to address the question in some circumstances. Usually, the best way to approach this type of question is to conduct a benchmarking exercise against publicly traded comps, however, nascent business models (such as Cloud Kitchens) usually won't have a solid public peer group to pull data from. If this is the case, then you'll need to conduct primary research by reaching out to professionals that work in the industry to gain their perspective on the business. However, this approach might not always be applicable due to time constraints, so an alternative method to answering the prompt would be to create illustrative unit economics and P&L structure based on any information you can find online.

After constructing an initial unit economics and P&L structure profile, you should then elaborate on the scalability of the business. For example, a company that currently has low or negative EBITDA margins but has the potential to scale EBITDA margins to 20-40% could present an opportunity to generate significant returns.

Additional Resources

• Fred Wilson’s thoughts on Convertible and SAFE Notes

• a16z startup metrics

• S3 Cap Table Template

• Matt Turck on Playing “Fake” VC to Get a VC Job

• Above the Crowd

• Benedict Evans

• Stratechery

• StrictlyVC

• The Generalist

• Cold Start Problem

• Fundraising

• Innovator's Dilemma

• Innovator's Solution

• Origin of Wealth

• Recruiting

• Structure of Scientific Revolutions

• Technological Revolutions & Financial Capital

• Venture Deals

• Masters of Scale

Other resources

Check out another article below or view all our resources.

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Breaking into Venture Capital: Interview Tips, Tricks & Templates

This post originally appeared on the Femstreet blog and has been republished with permission.

Despite the job market being in flux currently, most venture capital firms’ hiring plans remain relatively unchanged for the remainder of the year. Venture Capital (VC) is a notoriously tough industry to break into — but the current climate may present as many opportunities as challenges with the right preparation.

Getting hired at a top tier VC is highly competitive. There is no formula: no specific college major work experience or skill set that is clearly a significant factor in contributing to success in the industry. This, in turn, makes the VC interview process a challenging one for which to prepare.

I myself had to go through the interview process just two years ago. I started Femstreet before I entered VC, and although the newsletter certainly helped me to get on VC radars, it was still not an easy ride and required endurance, the right resources, and preparation. Now that I am on the other side, I want to pay it forward — providing our members’ community with the insights and information they need to put their best foot forward into the VC process.

To start, here are my top five tips for getting a job in venture:

• Give, give, give before you ask for anything. Send VCs deal flow, host dinners with founders, organize virtual meetups with industry experts or try to support firms with diligence calls when they have questions that are aligned with your experience. Show a freemium version of yourself.
• Showcase the calibre of your thoughts publicly. A lot of people get in through content creation, including memes (not sure I’d recommend that route). Harry Stebbings got into VC through podcasting, just as I did through a newsletter. There are loads of blogger VCs, and even if you are just curating content, people love newsletters with a personal touch.
• It’s all about relationships. Venture capital is an industry built on trust and reputation. Lean into your existing networks and build them out.
• Do your homework. If you are interviewing at a SaaS focused or consumer-focused fund, make sure you have a good understanding of the standard SaaS and consumer metrics, exit multiples and go deep in your research in one sector. Make sure to check the partners’ background, know their portfolio companies and prepare specific questions. I’d also recommend speaking to founders they have backed.
• Practice makes the master. Don’t expect to get a job offer after your first interviews. Instead, use them to learn about the industry, build relationships and then practice, practice, practice.

The key to creating a framework for preparing for interviews is to ensure you are prepared to answer questions that cover each of the below elements:

• Who: Who are you and why are you a good fit for the role and the firm?
• What: What makes you qualified for the role? What evidence can you provide to support that?
• Where: Where have you succeeded and struggled? What did you learn from those experiences?
• Why: Why this role at this firm? Why did you choose your past roles?
• How: How will you contribute to the firm?

I am here with Austin Guy and JJ MacLean from GoingVC , a professional development program and global community helping its members advance their careers in Venture Capital. GoingVC brings together experts in venture capital, entrepreneurship, and business and fosters a collaborative environment where future leaders of the industry can learn and build on the essential skills they’ll need for success in the field.

While they prepare to release The GoingVC Venture Capital Interview Guide , we wanted to go over some of the most common questions that come up in VC interviews and how to get ready for them.

Femstreet (F): Let’s start with the basics, how would you answer: ‘Why do you want to work in venture capital? Why right now?’

Austin (AG) : Great start. This is one you can almost guarantee will be in any interview. A key here is to express what excites you about the VC industry. Is it getting to work with a variety of startups? Or help bring new companies into the world? Jot down a few things alongside the skills you’ve acquired thus far throughout your career and then tie them together into an upward arc that ends with VC being the next logical step. Here’s what this might look like:

“I want to open doors for founders and have a general interest in understanding the challenges that entrepreneurs in tech startups face. VC is a people business and it’s a privilege to be meeting and working with exceptional entrepreneurs, building relationships with founders, talking with them about their products and vision and our future. I am curious about disruptive technologies, companies, business models, people and ways to create sustainable value.”

JJ : If you can, talk about past situations where you had to quickly identify and evaluate new opportunities, assimilate new information and other skills that are at the heart of what VCs do.

Of course, it also goes without saying that you should have a solid grasp of the basics of the industry before going into any interview. If the firm has a blog, be sure to read it to understand their perspective of the industry as well and find ways to align your perspective with theirs to show how VC is not only a fit for your skills, but you are a fit with their firm.

F: Expanding on that, what about: ‘Why VC as opposed to an operational role with a startup or launch your own company?’

JJ : This question, I can almost guarantee, will be asked in any interview. A lot of what we said above will definitely apply but this is a really great question to ask yourself before you even begin applying to roles in VC because having an understanding of how VC works often comes from having hands-on experience running the operations of a company. So ask yourself first if you feel like you have that experience (whether directly or indirectly), and if not, consider that as a first path to VC.

AG : If you do, you should be able to articulate why moving into the more general realm of VC makes sense. As we mentioned earlier, it’s an opportunity to help more founders, build new skills, learn a new industry and from a different perspective.

F: What about ‘where do you want to be in five-years?’

JJ : VC has a typical career path in terms of starting from Associates to eventually becoming a partner. Junior VC roles typically come with fixed lengths. You’re not committing to anything here, but you should give it some thought. Do you want to stay in venture? Join a startup? Get your MBA? Think about what you might want to focus on at the firm and where that would lead to next. If it’s a pre-MBA role going to get your MBA next is an easy answer, but it’s still a good idea to take some time to think about why you’d want to do that next.

AG : Look at how VCs spend their time. While the obvious is the day-to-day as it relates to working with portfolio companies, raising new funds, and deal sourcing, VCs often acquire board seats, work with philanthropic causes, author content, and more. How would those ancillary roles fit into your career over the next five years?

F: What about past roles? How would you prepare for questions like: ‘What were you responsible for in your last job?’ or ‘what did you like/not like about it?’

JJ : Practice your storytelling! All great VCs are excellent storytellers. There’s no right or wrong approach to approach these sorts of questions, but one way we find helpful at GoingVC for any ‘tell me about a time when…’ is the STAR-(L/P) Framework.

• S ituation — what was the event or challenge?
• T ask — what were you responsible for?
• A ction — what steps did you take, or how did you solve the problem?
• R esult — what was the outcome of the event/problem?
• L earning/ P lanning — what did you learn from the situation or how planning on exploring it further?

Write down a few points for each section of the framework and then assemble them into a cohesive answer. Your time in the interview will be limited so stick to the main points and don’t get bogged down in the details.

AG : Yes — brevity is important!

F: How should people talk about their most significant strengths and challenges?

AG : Another great one, and glad you brought up challenges here because no one is perfect, and the VC industry is one that is often defined by its failures.

Be genuine, and don’t pretend your career has been easy up to this point. Get specific about why the challenges you faced were challenging and end with a positive take on the situation. If the startup you worked on failed, go over the lessons you learned. If investments (whether real or paper) didn’t turn out as expected, talk about any flags you retrospectively missed. Owning your failures and challenges and talking about how you overcame them demonstrates resilience and an ability to course correct both critical skills in an industry often shaped by failure.

JJ : When it comes to your strengths, it’s time to be proud and wave the flag! Where do you think you excel? Try and relate it to the job, but VC roles are pretty multidisciplinary, so don’t worry too much if you’ve got some non-traditional superstar skills to highlight.

F: Continuing on that last comment, another common question is, ‘tell us something we don’t know from your resume?’ Can you talk about why it’s essential to get that one right?

JJ : Totally! It’s pretty simple, actually. VC teams are often pretty small, making it critical that they’re all able to relate to, work with, and grow with each other. It’s also an industry that thrives on betting against conventional wisdom. Talking about your life outside of your professional experience can help fill in your potential teammates on the person they might be working with. How fun and rewarding it’ll be, as well as the different point-of-views you’ll bring to the table — so be honest, bring your whole self, and (of course) come prepared with some stories to share.

AG : At GoingVC we actively recruit people from different backgrounds because we value the diversity of ideas and experiences it brings to the collective community. Great VC firms operate in a similar way, so be sure to express what you’ve done outside of the day-to-day of your professional roles that would apply. These are things like side hustles, attending networking events, enrolling in online classes, learning new technologies — what outside of work do you do that you might be paid to do as a VC?

F: How about: ‘what do you expect your day today in the role to look like?’

JJ : Do your homework! If you can, try and meet up with a past or present associate from the firm for coffee. Read the firm’s blog, check out people on the team on social media, subscribe to their newsletter, and look for clues. What processes do they talk about, what conferences do they go to, what have they been funding recently? Try and put together a picture of what that means in terms of how they spend their time.

F: Yes! Doing your homework before each interview is an essential part of the process. Another common type of question you should prepare for is: ‘Why our firm?’ or ‘How are we different from our competitors?’. How would you prepare for that, and why is attention to detail so important?

JJ : Great question! The important thing to remember with these sorts of questions is that there’s no right or wrong answer. The interview is an opportunity for you and the fund to find out if there’s a match between your interests/desires/skills and what they need.

AG : Read up on the firm (and as JJ said, best if you connect with current or former employees) and ask yourself what’s attractive about it? Their culture or reputation? The geographies or types of companies they invest in? Is there a certain individual that embodies the type of career path you have in mind or would like to work with or have as a mentor? Keep in mind, however, that while most VC teams are small, you may not interact with that person on every deal or project, so be sure the broader culture is one you resonate with. In terms of a checklist of items to ensure you have researched, we recommend focusing on fund performance (IRR or estimated historical returns), the reputation of the fund partners among founders, and the philosophy of the fund and the fund’s focus.

JJ : Every VC will tell you they have some sort of competitive advantage, but few rarely do. There has been lots of research documenting the fact that the majority of returns in the industry are earned by the minority of VCs. What do those GPs do better than the rest? Does this firm have something similar? This is where doing your homework on their process, their management, the portfolio companies, and what is essentially their brand pays off.

AG : A lot of this is anecdotal and can be obtained through networking within the community but a lot can be learned from their own content if it’s available.

F: Another firm-specific question I always prepared for was: ‘which of our portfolio companies are you most excited about?’ it’s flipside, ‘which would you have passed on?’ was often a little harder. How would you approach those?

JJ : Pick out a couple of portfolio companies, ideally in a sector you’re excited about, and develop your own opinions. Play around with the products, if you can. What differentiates them from their competitors? How fast are the markets growing? What are the potential roadblocks?

Next, ask yourself if there’s anything you would have missed or misunderstood in the past? Hindsight is 20/20, but try and put yourself in the shoes of someone without what you know today. How big did the market look when the company was founded? Was the problem obvious? Did the solution seem infeasible either technically or because it required a big change in behavior?

AG : Here’s an example:

“I probably would have passed on BigCityTech because their target market was real estate brokers. My thoughts would have been that the increasing number of homebuyers looking online, combined with giant property aggregators pushing commissions down, would have been a huge barrier to strong rapid growth. What I would have failed to see though was how the company was creating an entirely new business model around home selling with significant benefits to both buyers & sellers. I’d love to learn more about their go-to-market strategy and how they approached creating and scaling the business now that I can see the huge problem they’re working on.”

F: What about questions around sector expertise?

JJ : This line of questioning can be intimidating for a lot of people. It can feel like the only way to be prepared is to spend hours and hours researching a dozen exciting-sounding companies across a handful of sectors.

AG : At GoingVC we strongly recommend a different approach: Go for depth, not breadth. Pick a single sector you’re excited about (and is within the firm’s comfort area) and dive into a couple of companies in the space. Try their product, talk to the founders if you can. Come prepared to articulate why you think they’ll grow rapidly. If you have enough time, we’d definitely recommend putting together an investment thesis. When pitching a sector, focus on these items: an introduction to what it is and what types of businesses operate within it, one to two area(s) of opportunity (i.e. the problems) and why they matter, the solutions, who is leading the efforts to solve the problems, and a couple of reasons why they’re the best bets in the space to emerge as the leaders. Here’s how I might pitch a sector, sticking with Proptech:

“I am very interested in the Proptech industry. Real estate is the largest asset class in the world but suffers from outdated technology and particularly when buying and selling homes, a lack of transparency and speed. A company that is making serious progress in this space is Qualia, a platform that enables agents, their clients, and title companies to share in the closing process, making it easy for everyone to stay on track, record transactions, and reduce friction to what is often a very challenging process. They have already integrated with many of the largest title companies across the country and are continuing to expand.”

F: And pitching a startup?

JJ : Similar to the above, come prepared with two or three different answers. Dig deep and try and find something beyond the big names or ones that have recently been in the news headlines. Bonus points if you can articulate why you think others might be undervaluing the company or its growth trajectory!

Your pitch will vary a little depending on the type of company you’re talking about, but at a minimum, we’d recommend you include:

• The problem they’re working on, their solution and why you think it’s significant
• The core team
• Why now? Why hasn’t anyone solved this problem before
• The target market, and key competitors
• Their traction so far
• What excites you about the company and potential flags/negatives
• How you think it fits within the firm’s strategy

Make sure you talk about the problem the company’s working on (and why you think it’s significant), their team, traction, competitors, what excites you about it, and how it fits within the firm’s strategy.

F: Expanding on that, how would you prepare for questions on due diligence? What critical things do you look for?

AG : Really great question. The due diligence process is part science, part art. There are certain things you’ll almost always want to look at, but it’s not just a simple checklist. Different aspects of a company will be more or less important depending on the sector or type of company, and every firm has its own strategy as well.

Read up on diligence in the sectors you’ve prepared to talk about, and see what you can glean about the firm’s approach as well. Can you spot any patterns in their portfolio companies when it comes to things like traction, market, future funding requirements, or technology? What seems to be the key factors for them? At a minimum, though we recommend you include:

• An initial screening process to ensure companies fit with the fund’s views on any sectors, geographies, and/or stage
• An estimation of the Total Addressable Market size
• A review of the strengths and weaknesses of the founding team
• Assessment of the product and relevant KPIs and metrics
• Uncover if there are any potential competitive advantages being developed
• A review of financial projections for reasonability and soundness

F: And your top questions in a first founder meeting?

JJ : Like the rest of the diligence process, this will vary from company to company, but for an initial first meeting, there will be a few questions you’ll always want to ask. Run through the typical screening questions like the problem/solution they’re working on, how big they think the market will be (and how they came up with that), but then dive deeper. How did the team meet, what are their backstories, how do they intend to build a durable competitive advantage? Another great one is ‘why now.’

AG : Because I think a natural follow up might be, “Where should candidates focus” let me add that questions about the team should be primary. A company is always the sum of the efforts of a team. Especially when investing at the earlier stage of the spectrum, the team may be all that exists. Talking to the founders about the team makeup, the skills, the fit, and the experience can help determine who might be best equipped to not only solve the team problem they have identified but handle unforeseen challenges that face every startup.

JJ : Take some time to think about what you’d want to know to decide whether to spend more time digging into the company. A typical VC will look at hundreds of companies a year, and like Beyoncé, they too only have 24 hours in a day. Building up an ability to quickly figure out which companies to look into more is an important skill.

F: Lola from Hummingbird VC published this great list of VC resources : what other resources would you recommend?

AG : We’re avid readers of who we think are the best thought leaders in our industry, many of whom are covered in that list (especially Andrew Chen, Benedict Evans, StrictlyVC, and Stratechery, to name a few). Outside of that, The Secrets of Sand Hill Road by Scott Kupor and Breaking into VC by Bradley Miles are great VC books.

I’m a big fan of trying to read up on a bunch of different genres and topics, and some of my favorites the last couple years are Crossing the Chasm (Moore), Invisible Influence (Berger), Atomic Habits (Clear), Platform Revolution (Choudary), The Culture Code (Coyle), Machine, Platform, Crowd (McAfee), and How To Create A Mind (Kurzweil). Those should give anyone Amazon recommendations for years on all relevant topics from better work habits to the future of AI!

JJ: Love all those! Another book that I think is an absolute classic is Venture Deals by Brad Feld and Jason Mendelson and if you’re looking for something with more of an academic spin the Business of Venture Capital by Mahendra Ramsinghani. If you like history, Creative Capital by Spencer Ante is also a great read and gives a compelling background on the development of the industry. I’m also a really big fan of Shane Parrish at Farnam Street, especially his book series on Mental Models and Tom Seides podcast Capital Allocators if you want some insight into the LP perspective.

Finally, Sarah earlier touched on the importance of sharing your thoughts publicly, if you’re not sure where to start one resource I think is really great is the Holloway Guide to using Twitter.

F: Core to a VCs job is being able to pick out and invest in the most promising startups. However, you can’t invest in the best if you never have a chance to meet them leading to the common question: ‘how would you source companies?’. What do firms want to hear?

JJ : The obvious (and important) answer is to start or continue building out your network. Great VCs are known for having incredible networks and relying on them to source credible deals. Think about who in your current network could help provide deal flow, and how could you bolster it.

AG : Don’t forget to think about ways beyond your network as well! Could you build a tool, or start a newsletter? Help new entrepreneurs by offering to lend a hand if you’ve got relevant skills? Take some time to see if you can think up any different or unique ways of building a relationship.

F: What about the other end of the investment lifecycle — how do I prepare for the questions about the IPO or M&A market?

AG : Signing up for newsletters and staying informed can be helpful here. Publications like TechCrunch, Hacker News, Crunchbase, and CBInsights do a lot of reporting on deals, exits, and the general condition of the IPO/exit marketplace. The best idea is to read the S-1s of companies that have recently filed to go public. Don’t let yourself get bogged down trying to read them all, however. You can get to the salient points pretty quickly in those documents that cover the goals of the company and the historical financial performance.

JJ : Beyond developing a general understanding of the IPO/M&A landscape, we’d also recommend picking a couple of recent exits, ideally companies you’ve followed for a while and diving deeper into them. Come prepared to talk about their progress and how they’ve evolved. Shout out to Tomasz Tunguz and his newsletter here, too.

F: Before we wrap up, every interview should leave time for the interviewee to ask some questions. What questions would you recommend asking the interviewer if given the opportunity?

JJ : Thank you for this question. It’s important to remember here that the interview process isn’t a one-way street. You’re taking the time to learn more about each other. Ask yourself what would be important to you in the role that you don’t know already? That said if you’ve done your homework and feel pretty well informed already here are a few of our favorites:

• Is there anything about the role and/or firm that I should know that we haven’t talked about?
• Which companies are you most excited about within the portfolio?
• What non-obvious competitive advantage do you feel your team has?
• Have you considered expanding beyond the verticals, stages, or other specifics to expand deal flow?
• How do you think about ownership when it comes to the term sheet? What are your views on determining equity allocation, caps and discounts, hurdle rates, etc?

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How To Get Into Venture Capital: A Complete Guide

For many, a venture capital role is one of the most lucrative and exciting out there.

Your job is to find startup companies with high growth potential, invest in them, and help them succeed. In return, you get an equity stake in the company and might get enormously wealthy ?.

Venture capitalists – or VCs – work as pre-IPO private investors. This means that VCs invest before in early stage companies before they go public.

While venture capital is all about helping others get their start, have you ever wondered how a venture capitalist gets his or her start?

In this post, that’s what I’ll distill. I’ll go into step-by-step detail giving you all you need to know about breaking into venture capital.

Why Venture Capital?

Let’s cover some of the top reasons why a career in venture capital might be exciting to you:

• Shape the companies of the future – With the recent tech and startup boom, VCs are literally helping shape the future leaders of the global economy.
• Exposure to technology trends – Venture capitalists sit at the exciting intersection of technology, startups, and finance. If you love following technology trends, you’ll love venture capital jobs , since they reward those who are on the most cutting edge.
• Empower the underdog and support founders – All founders are “underdogs” by definition. That’s because in the early stages of any company, the odds are stacked against all companies. As a result, as a venture capitalist it can be extremely rewarding to help support and empower entrepreneurs overcome the odds.
• Financial remuneration – There are large rewards for any venture capitalist that bets on winning companies. Because of the 2 and 20 fee structure, if you have a generational winner, you can take home hundreds of millions (or more) for your firm and yourself.
• Slow rewards and feedback cycles – many VCs complain that it can take a decade before they know whether their investment in a company is going to work; this can make it difficult to assess your ability in the job and also to reap the financial rewards of being good
• Difficult to advance within firms – it can be quite difficult to advance with established venture capital firms due to high competition for roles and promotions
• Competitive industry – like lots of areas of finance (e.g. private equity, growth equity, and investment banking), there is lots of competition in VC, so it can be difficult for firms to win deals and drive strong returns, especially when a couple deals tend to drive the lion’s share of rewards for the industry overall each year.
• All about sales – related to above, if you miss the top deals of the year, it can be quite challenging to make strong returns; therefore, you spend lots of time as a VC trying to build your brand and ultimately “win” spots in good deals

Venture Capital Skills and Requirements

While there are many ways to standout, one key part of getting into venture capital is making sure you have the necessary skills.

Key skills and characteristics include:

• Investment experience – while not a hard requirement (especially if you’re interviewing for entry-level VC roles) it can be quite helpful to have some form of investment experience under your belt (e.g. angel investing, private equity, growth equity, etc.)
• Deal sourcing – In VC, a big part of being great is having a competitive edge in seeing all the top deals. This is why many VCs have doubled down on building a personal brand (e.g. through Twitter), because it’s one way to ensure you see lots of inbound deals
• Financial modeling – Most seed investing roles require no modeling at all; however if you apply for funds that invest at Series A or later, you’ll likely need to know how to build financial models
• Natural curiosity – A venture capitalist needs to have a natural drive to learn. Venture capital firms are constantly looking for the latest technological advancements to invest in. The venture capitalist needs to be willing to learn and harbor a natural curiosity for the future of tech.
• Strong communication – Communication is necessary on all fronts in the field of VC. You need to communicate effectively with your clients and network extensively with industry professionals. The only way you’re going to find new investment opportunities is through the power of networking.
• Hustle & service to entrepreneurs – Given how competitive top deals are to win, VCs often resort to extreme lengths in order to win an “allocation” in competitive deals; this could mean working long or unpredictable hours, providing free support to entrepreneurs before you invest, etc.

Venture Capital Career Path

When applying for a venture capital role, it’s important not to have a one-size-fits-all view of VC roles.

Within a firm, there are also several different job roles. They include:

• Senior Associate
• Principal or VP 
• Partner or Junior Partner 
• Senior Partner or General Partner

To deeper on these roles and which one might be best to apply for, check out my article on venture capital career paths .

Becoming A Venture Capitalist: 3 Primary Pathways

While are there more broad steps you can take to kickstart your venture capital career (see the next section), there are three chief entry points.

To successfully establish your career, you’ll likely need to enter through one of them.

While many VCs earn their MBA, many others join venture capital firms before getting an MBA. Most pre-MBA hires have worked in prestigious management consulting, investment banking, or operational roles within successful startups or tech companies (e.g. sales, business development, or product management).

It’s not uncommon that the early employees of a startup might develop relationships with the company’s VC. With a strong referral from the CEO, this can be a great path into pre-MBA VC roles.

Traditionally, VC roles were only given to folks with an MBA. Even though this has changed dramatically — many paths exist now — getting an MBA at a top school is still a great entry point into VC.

Folks who land roles in this way typically have investment banking, private equity, management consulting, or startup/tech company experience before attending business school.

Senior Executive or Partner

The third main entry point requires you be a successful founder of a startup. Alternatively, you worked in a high-up position in a start-up company. Any function can be acceptable (e.g. engineer, product, finance, sales, etc.), but ideally this experience provided you with direct experience with VC firms and provided you with some contacts.

With this experience, you might be asked to join the VC fund at a more senior level (e.g. partner, executive in residence, or operating partner).

Angel Investor

In recent years, there’s now a fourth entry point into VC. This is my absolute favorite because it’s the most scrappy and meritocratic. If you wan to get into VC, instead of waiting for someone to “anoint” you a venture capitalist, you can simply start doing it as an angel investor!

You can get started yourself, and then PROVE that you know how to do the job by earning a great track record. Because of new crowd platforms that brought down the barriers to angel investing (e.g. WeFunder, and Republic), you can make investments in many startups of $100 or less. This is a gamechanger, because to be an angel beforehand, you used to have to invest upwards of $10k per deal.

Angel Investors vs Venture Capitalists

Angel investors and venture capitalists are both important players in the world of startup investing, but they have distinct differences. Angel investors are individuals who invest their own money in startups, while venture capitalists are professional investors who use other people’s money.

Angel investors typically invest smaller amounts (around $10,000 to $500,000), work alone, and primarily offer financial support. Venture capitalists make larger investments (typically $1 million to $10 million), work as part of a firm, and may provide additional assistance. Angel investors focus on early-stage companies, while venture capitalists support companies at various stages. Due diligence, investment timelines, funding sources, risk tolerance, and involvement in the companies also differ between the two.

For the complete breakdown, check my comprehensive article of angel investors vs venture capitalists .

How to Get Into Venture Capital – A Step-by-Step Guide

VC companies tend to operate a tight ship, with limited positions available. In 2020, Deloitte found that most VC firms have a median number of six employees.

So, how do you get into venture capital with so few positions available? That’s what we’ll talk about now.

The undisputed “best” way to get into VC

There’s one INCREDIBLE example of how to get into VC that everyone can learn from.

It’s podcaster, and now VC, Harry Stebbings.

If you don’t know him, he started a podcast as an 18-year old in the UK called The Twenty Minute VC. He was only a university student at the time, and had zero connections in the industry.

However, he stuck with it, and eventually landed incredible guests through hard work and persistence.

Eventually, the podcast became a top show. Today, it’s nearly a right of passage for top VCs to be on as a guest.

So, what happened to Harry?

Well, he still does the show. However, MANY investors were so impressed that an 18-year old had the grit and tenacity to build such a great show and following, that they offered him VC jobs .

He’d done something incredibly hard and his work was public — there for everyone to see. VCs were banging down his door to join their fund! He received tons of offers from top funds, and eventually chose to found his own fund, now called 20VC Fund .

Here are the les sons:

Don’t wait for an investor to give you permission, just start DOING THE JOB (or doing hard things that will prove you can do the job)

This advice will mean different things for different people. Everyone has a different set of assets and experiences. But the big takeaway is DO THE WORK.

Ways to take action

Below is a list of ways you can take action, do the work, and standout from the pack.

As I said above, everyone’s situation is different. Therefore, not all of these suggestions will be actionable or make sense for you!

• Start investing on your own – public stocks or (even better) actual startups! Use crowdfunding platforms like WeFunder and Republic to build a portfolio ($100 or less per investment)
• Double down on industry expertise – if you’re an engineer who works on devtools, you could be valuable to funds who are looking to invest in devtools! Advise them, find companies in the space, etc.
• Build a competitive advantage (e.g. an audience, a community) – this is what Harry Stebbings did (as I explained above). Build a following or grow an audience! These will directly help you on the job too!
• Get great work experience – work at a great company , or work in investment banking, private equity, growth equity, or management consulting
• Build a reputation from working in great startups – If your CEO loves you, he or she may get exposure to the company’s investors
• Get into a top business school – any top 10 business school will do! Then get internships while there
• Found a successful company – easier said than done! But if you can do this, you’ll definitely get into venture
• Prepare a market thesis – everyone can and SHOULD do this, no matter what your background; find an industry or a market that you think will produce interesting companies, and put together a presentation on it (and then send it to VCs!). If you need help on how to do this, check out my course for a step-by-step walkthrough
• Network by sending investment prospects – the best and most differentiated way to standout in networking is by sending (good) prospects. No one does it! But you should.
• Share your investment thinking online – If you’re investing in startups and/or finding prospects for networking, create a memo explaining why you like certain industries or why you made certain deals. Publish it online. Over time, you’ll create a body of work (like Harry Stebbings did) that is undeniable
• Don’t ask for an internship, just start doing one (unofficial) – I love this one. Find investors you want to network with and instead of asking for an internship, ask if you can send them 3-4 great prospects once a month … spoiler alert, they WON’T SAY NO! Maybe they’ll get on a call for feedback, or maybe they won’t. In any case, this is effectively what an internship would be. AND, they will DEFINITELY be impressed.
• Start helping startups & portfolio companies – Instead of asking VCs if you can get involved with their companies, just go direct to the companies. Cold email the CEO and ask how you can help! For instance, if you’re a product lead at Google, maybe you can help them sort out product strategy, etc. If the CEO of a portfolio company thinks you’re awesome and writes a warm intro referral for you, it’s an incredible way to impress a VC.

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Venture Capital Recruiting Process

Once you’ve networked and secured interviews (or simply applied for open roles), next you need to tackle the recruiting process.

Some venture capital firms enlist headhunters (or external recruiters) to assist in their hiring process. If that’s the case, you’ll need to meet with them in order to make it into the interview process.

However, since so many firms are quite small, it’s not uncommon that firms will run the hiring process themselves. Usually hiring occurs throughout the year, as needs arise.

In this case, venture capital interviews would typically involve multiple rounds — from initial outreach to final round interviews. Typically in the beginning stages, it’ll be less formal and will focus on getting to know you and your experiences. However, as you progress to later rounds, firms will ask more technical questions about investments and markets, as well as give you a venture capital case study (discussed below).

Venture Capital Resume

As discussed above, your qualifications and experiences is a key criteria to get into a top venture capital firm. This could include:

• Top business school
• Top undergraduate school
• Top performer at exciting startup
• Top performer at well-known tech company
• Top performer at investment bank
• Prior investing experience (e.g. growth equity or technology private equity)

However, as I’ve discussed above, there are many ways to SHOW that you can do the job without those experiences. These include:

• Sending good investment ideas or market theses. My course guides you on how to do this
• Helping portfolio companies!

Read our detailed guide on how to write a venture capital resume (with example).

Venture Capital Interview Questions

Of course, in addition to having the right experiences for the job, you’ll also need to have excellent interviews in order to secure an offer in venture capital.

Typically, in interviews, you’ll see three different kind of questions:

• Fit questions – Why VC? Why this firm? Why should we pick you? Resume walkthrough.
• Behavior questions – Tell me about a time you sold something? Tell me about a time you showed leadership? etc
• Investing questions – What startups or markets do you like? What are the pros and cons of X business model? What are the key areas you’d want to diligence in X business?

Venture Capital Case Study

When interviewing at most venture firms, you’ll be asked to complete a venture capital case study.

Every firm is a little different, but the standard version of this is that they will give you a set of materials on a company — usually a real company’s pitch deck — and they’ll ask you to develop an investment memo or to simply write the pros and cons of the investment.

In this exercise, you’ll be showing how you think, as well as your lens for evaluating businesses for investment.

One great investment framework that I love for growth equity can also be applied in case studies for venture: the 3Ms.

• Business Model

Get these right, and you’ll almost always have a winner on your hands.

Venture Capital Financial Modeling

Venture capital financial modeling is an important skill for investors. This practice involves creating financial models that project the future performance of a business, including expenses, revenue, and growth. By doing so, investors can assess the viability of their investment and estimate potential returns.

The significance of financial modeling varies depending on the stage of investment. For early-stage startups, it helps provide insights into the company’s operations and spending patterns. In later stages, such as Series A funding, it becomes more critical as there is more historical data to analyze and project from.

Key components of these models include revenue projections, which indicate the company’s income potential, and growth strategies that outline how the company plans to expand. Plus, expense analysis is needed for understanding how costs impact profitability. Valuation methods, such as earnings multiples and discounted cash flow, help determine a startup’s worth and guide investment decisions.

While creating financial models can be complex and data-intensive, adhering to best practices can improve their accuracy and usability. Attention to detail, financial literacy, realistic assumptions, and transparency about capital usage are some of the core principles that contribute to successful venture capital financial modeling.

Explore further by checking out my detailed guide on the foundations of venture capital financial modeling .

Do you need a license to become a Venture Capitalist?

There is no form of license required to become a venture capitalist.

How long does it take to become a Venture Capitalist?

Everyone’s path to venture is quite different. As discussed above, some enter the industry with zero or a couple years of experience, while others have full careers and have started a company before joining a venture capital role.

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Case Study: Should This Start-Up Take VC Money or Try to Turn a Profit?

• Ramana Nanda

Customers love it, but it’s running out of cash.

Unable to solve their impossible problem, VV and Reza went out for a ride. Miles down the California coast, they parked their bikes under the eucalyptus outside a winery conference center. It wasn’t a random stop. They knew that FundersPlatform, a rival to their start-up, AndFound, was holding a networking event there, and they were curious about what sort of crowd it had drawn.

• Ramana Nanda is Sarofim-Rock Professor and Co-Director of the Private Capital Project at Harvard Business School.
• Liz Kind is a senior researcher at Harvard Business School.

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Venture capitalists’ unique approach to investment and innovation has played a pivotal role in launching one-fifth of the largest U.S. public companies. And three-quarters of the largest U.S. companies founded in the past 50 years would not have existed or achieved their current scale without VC support.

The question is, Why? What makes venture firms so good at finding start-ups that go on to achieve tremendous success? What skills do they have that experienced, networked, and powerful large corporations lack?

The authors’ research reveals that the venture mindset is characterized by several principles: the individual over the group, disagreement over consensus, exceptions over dogma, and agility over bureaucracy. This article offers guidance to traditional firms in using the VC mindset to spur innovation.

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VC Interview - Case Study

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I am currently going through an interview process with a VC firm and have been asked to complete a case study at home. They let me pick they 24-hour window of my choice and I'm to return the deliverable the next day.

Anyone ever had something similar? What should I expect?

I've searched this forum (and others) but I haven't been able to find a lot of good info for VC case studies. Any suggestions on how to prepare?

HI, I am going through a similar process. Could you share some of you experience? What was the case about and what were they asking for? Cheers

I had 2 similar cases during my interviews.

In one, I was given a sales dataset for a fictional ecommerce company. Asked to go through it, evaluate the company, identify areas of concern, and identify additional questions to be asked. Product was a ~4 slide ppt deck. Very straightforward coming from a consulting background. Discussed my findings with an associate for about an hour.

In the other, I was given the pitch deck of an actual company the firm had been evaluating and asked to put together 1 page (word doc) on my thoughts: pros, cons, concerns, additional questions, etc. This was much more challenging without previous VC experience but much more indicative of the actual work I'm doing on the job. Discussed my thoughts with a VP for about an hour. Given the more subjective nature of the case, they were applying much more pressure on my assumptions.

VC Case Study ( Originally Posted: 11/24/2014 )

I recently made it through the phone interview portion for a pre-mba associate role at a family office VC fund. In a week or two I will be receiving a case study via email to complete and send back. Any idea on what I should expect? All replies are appreciated.

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How to write a case study — examples, templates, and tools

It’s a marketer’s job to communicate the effectiveness of a product or service to potential and current customers to convince them to buy and keep business moving. One of the best methods for doing this is to share success stories that are relatable to prospects and customers based on their pain points, experiences, and overall needs.

That’s where case studies come in. Case studies are an essential part of a content marketing plan. These in-depth stories of customer experiences are some of the most effective at demonstrating the value of a product or service. Yet many marketers don’t use them, whether because of their regimented formats or the process of customer involvement and approval.

A case study is a powerful tool for showcasing your hard work and the success your customer achieved. But writing a great case study can be difficult if you’ve never done it before or if it’s been a while. This guide will show you how to write an effective case study and provide real-world examples and templates that will keep readers engaged and support your business.

In this article, you’ll learn:

What is a case study?

How to write a case study, case study templates, case study examples, case study tools.

A case study is the detailed story of a customer’s experience with a product or service that demonstrates their success and often includes measurable outcomes. Case studies are used in a range of fields and for various reasons, from business to academic research. They’re especially impactful in marketing as brands work to convince and convert consumers with relatable, real-world stories of actual customer experiences.

The best case studies tell the story of a customer’s success, including the steps they took, the results they achieved, and the support they received from a brand along the way. To write a great case study, you need to:

• Celebrate the customer and make them — not a product or service — the star of the story.
• Craft the story with specific audiences or target segments in mind so that the story of one customer will be viewed as relatable and actionable for another customer.
• Write copy that is easy to read and engaging so that readers will gain the insights and messages intended.
• Follow a standardized format that includes all of the essentials a potential customer would find interesting and useful.
• Support all of the claims for success made in the story with data in the forms of hard numbers and customer statements.

Case studies are a type of review but more in depth, aiming to show — rather than just tell — the positive experiences that customers have with a brand. Notably, 89% of consumers read reviews before deciding to buy, and 79% view case study content as part of their purchasing process. When it comes to B2B sales, 52% of buyers rank case studies as an important part of their evaluation process.

Telling a brand story through the experience of a tried-and-true customer matters. The story is relatable to potential new customers as they imagine themselves in the shoes of the company or individual featured in the case study. Showcasing previous customers can help new ones see themselves engaging with your brand in the ways that are most meaningful to them.

Besides sharing the perspective of another customer, case studies stand out from other content marketing forms because they are based on evidence. Whether pulling from client testimonials or data-driven results, case studies tend to have more impact on new business because the story contains information that is both objective (data) and subjective (customer experience) — and the brand doesn’t sound too self-promotional.

Case studies are unique in that there’s a fairly standardized format for telling a customer’s story. But that doesn’t mean there isn’t room for creativity. It’s all about making sure that teams are clear on the goals for the case study — along with strategies for supporting content and channels — and understanding how the story fits within the framework of the company’s overall marketing goals.

Here are the basic steps to writing a good case study.

1. Identify your goal

Start by defining exactly who your case study will be designed to help. Case studies are about specific instances where a company works with a customer to achieve a goal. Identify which customers are likely to have these goals, as well as other needs the story should cover to appeal to them.

The answer is often found in one of the buyer personas that have been constructed as part of your larger marketing strategy. This can include anything from new leads generated by the marketing team to long-term customers that are being pressed for cross-sell opportunities. In all of these cases, demonstrating value through a relatable customer success story can be part of the solution to conversion.

2. Choose your client or subject

Who you highlight matters. Case studies tie brands together that might otherwise not cross paths. A writer will want to ensure that the highlighted customer aligns with their own company’s brand identity and offerings. Look for a customer with positive name recognition who has had great success with a product or service and is willing to be an advocate.

The client should also match up with the identified target audience. Whichever company or individual is selected should be a reflection of other potential customers who can see themselves in similar circumstances, having the same problems and possible solutions.

Some of the most compelling case studies feature customers who:

• Switch from one product or service to another while naming competitors that missed the mark.
• Experience measurable results that are relatable to others in a specific industry.
• Represent well-known brands and recognizable names that are likely to compel action.
• Advocate for a product or service as a champion and are well-versed in its advantages.

Whoever or whatever customer is selected, marketers must ensure they have the permission of the company involved before getting started. Some brands have strict review and approval procedures for any official marketing or promotional materials that include their name. Acquiring those approvals in advance will prevent any miscommunication or wasted effort if there is an issue with their legal or compliance teams.

3. Conduct research and compile data

Substantiating the claims made in a case study — either by the marketing team or customers themselves — adds validity to the story. To do this, include data and feedback from the client that defines what success looks like. This can be anything from demonstrating return on investment (ROI) to a specific metric the customer was striving to improve. Case studies should prove how an outcome was achieved and show tangible results that indicate to the customer that your solution is the right one.

This step could also include customer interviews. Make sure that the people being interviewed are key stakeholders in the purchase decision or deployment and use of the product or service that is being highlighted. Content writers should work off a set list of questions prepared in advance. It can be helpful to share these with the interviewees beforehand so they have time to consider and craft their responses. One of the best interview tactics to keep in mind is to ask questions where yes and no are not natural answers. This way, your subject will provide more open-ended responses that produce more meaningful content.

4. Choose the right format

There are a number of different ways to format a case study. Depending on what you hope to achieve, one style will be better than another. However, there are some common elements to include, such as:

• An engaging headline
• A subject and customer introduction
• The unique challenge or challenges the customer faced
• The solution the customer used to solve the problem
• The results achieved
• Data and statistics to back up claims of success
• A strong call to action (CTA) to engage with the vendor

It’s also important to note that while case studies are traditionally written as stories, they don’t have to be in a written format. Some companies choose to get more creative with their case studies and produce multimedia content, depending on their audience and objectives. Case study formats can include traditional print stories, interactive web or social content, data-heavy infographics, professionally shot videos, podcasts, and more.

5. Write your case study

We’ll go into more detail later about how exactly to write a case study, including templates and examples. Generally speaking, though, there are a few things to keep in mind when writing your case study.

• Be clear and concise. Readers want to get to the point of the story quickly and easily, and they’ll be looking to see themselves reflected in the story right from the start.
• Provide a big picture. Always make sure to explain who the client is, their goals, and how they achieved success in a short introduction to engage the reader.
• Construct a clear narrative. Stick to the story from the perspective of the customer and what they needed to solve instead of just listing product features or benefits.
• Leverage graphics. Incorporating infographics, charts, and sidebars can be a more engaging and eye-catching way to share key statistics and data in readable ways.
• Offer the right amount of detail. Most case studies are one or two pages with clear sections that a reader can skim to find the information most important to them.
• Include data to support claims. Show real results — both facts and figures and customer quotes — to demonstrate credibility and prove the solution works.

6. Promote your story

Marketers have a number of options for distribution of a freshly minted case study. Many brands choose to publish case studies on their website and post them on social media. This can help support SEO and organic content strategies while also boosting company credibility and trust as visitors see that other businesses have used the product or service.

Marketers are always looking for quality content they can use for lead generation. Consider offering a case study as gated content behind a form on a landing page or as an offer in an email message. One great way to do this is to summarize the content and tease the full story available for download after the user takes an action.

Sales teams can also leverage case studies, so be sure they are aware that the assets exist once they’re published. Especially when it comes to larger B2B sales, companies often ask for examples of similar customer challenges that have been solved.

Now that you’ve learned a bit about case studies and what they should include, you may be wondering how to start creating great customer story content. Here are a couple of templates you can use to structure your case study.

Template 1 — Challenge-solution-result format

• Start with an engaging title. This should be fewer than 70 characters long for SEO best practices. One of the best ways to approach the title is to include the customer’s name and a hint at the challenge they overcame in the end.
• Create an introduction. Lead with an explanation as to who the customer is, the need they had, and the opportunity they found with a specific product or solution. Writers can also suggest the success the customer experienced with the solution they chose.
• Present the challenge. This should be several paragraphs long and explain the problem the customer faced and the issues they were trying to solve. Details should tie into the company’s products and services naturally. This section needs to be the most relatable to the reader so they can picture themselves in a similar situation.
• Share the solution. Explain which product or service offered was the ideal fit for the customer and why. Feel free to delve into their experience setting up, purchasing, and onboarding the solution.
• Explain the results. Demonstrate the impact of the solution they chose by backing up their positive experience with data. Fill in with customer quotes and tangible, measurable results that show the effect of their choice.
• Ask for action. Include a CTA at the end of the case study that invites readers to reach out for more information, try a demo, or learn more — to nurture them further in the marketing pipeline. What you ask of the reader should tie directly into the goals that were established for the case study in the first place.

Template 2 — Data-driven format

• Start with an engaging title. Be sure to include a statistic or data point in the first 70 characters. Again, it’s best to include the customer’s name as part of the title.
• Create an overview. Share the customer’s background and a short version of the challenge they faced. Present the reason a particular product or service was chosen, and feel free to include quotes from the customer about their selection process.
• Present data point 1. Isolate the first metric that the customer used to define success and explain how the product or solution helped to achieve this goal. Provide data points and quotes to substantiate the claim that success was achieved.
• Present data point 2. Isolate the second metric that the customer used to define success and explain what the product or solution did to achieve this goal. Provide data points and quotes to substantiate the claim that success was achieved.
• Present data point 3. Isolate the final metric that the customer used to define success and explain what the product or solution did to achieve this goal. Provide data points and quotes to substantiate the claim that success was achieved.
• Summarize the results. Reiterate the fact that the customer was able to achieve success thanks to a specific product or service. Include quotes and statements that reflect customer satisfaction and suggest they plan to continue using the solution.
• Ask for action. Include a CTA at the end of the case study that asks readers to reach out for more information, try a demo, or learn more — to further nurture them in the marketing pipeline. Again, remember that this is where marketers can look to convert their content into action with the customer.

While templates are helpful, seeing a case study in action can also be a great way to learn. Here are some examples of how Adobe customers have experienced success.

Juniper Networks

One example is the Adobe and Juniper Networks case study , which puts the reader in the customer’s shoes. The beginning of the story quickly orients the reader so that they know exactly who the article is about and what they were trying to achieve. Solutions are outlined in a way that shows Adobe Experience Manager is the best choice and a natural fit for the customer. Along the way, quotes from the client are incorporated to help add validity to the statements. The results in the case study are conveyed with clear evidence of scale and volume using tangible data.

The story of Lenovo’s journey with Adobe is one that spans years of planning, implementation, and rollout. The Lenovo case study does a great job of consolidating all of this into a relatable journey that other enterprise organizations can see themselves taking, despite the project size. This case study also features descriptive headers and compelling visual elements that engage the reader and strengthen the content.

Tata Consulting

When it comes to using data to show customer results, this case study does an excellent job of conveying details and numbers in an easy-to-digest manner. Bullet points at the start break up the content while also helping the reader understand exactly what the case study will be about. Tata Consulting used Adobe to deliver elevated, engaging content experiences for a large telecommunications client of its own — an objective that’s relatable for a lot of companies.

Case studies are a vital tool for any marketing team as they enable you to demonstrate the value of your company’s products and services to others. They help marketers do their job and add credibility to a brand trying to promote its solutions by using the experiences and stories of real customers.

When you’re ready to get started with a case study:

• Think about a few goals you’d like to accomplish with your content.
• Make a list of successful clients that would be strong candidates for a case study.
• Reach out to the client to get their approval and conduct an interview.
• Gather the data to present an engaging and effective customer story.

Adobe can help

There are several Adobe products that can help you craft compelling case studies. Adobe Experience Platform helps you collect data and deliver great customer experiences across every channel. Once you’ve created your case studies, Experience Platform will help you deliver the right information to the right customer at the right time for maximum impact.

To learn more, watch the Adobe Experience Platform story .

Keep in mind that the best case studies are backed by data. That’s where Adobe Real-Time Customer Data Platform and Adobe Analytics come into play. With Real-Time CDP, you can gather the data you need to build a great case study and target specific customers to deliver the content to the right audience at the perfect moment.

Watch the Real-Time CDP overview video to learn more.

Finally, Adobe Analytics turns real-time data into real-time insights. It helps your business collect and synthesize data from multiple platforms to make more informed decisions and create the best case study possible.

Request a demo to learn more about Adobe Analytics.

https://business.adobe.com/blog/perspectives/b2b-ecommerce-10-case-studies-inspire-you

https://business.adobe.com/blog/basics/business-case

https://business.adobe.com/blog/basics/what-is-real-time-analytics

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Blinken Provides Case Study in How Not to Do Diplomacy

After he took office, President  Joe Biden   declared , “Diplomacy is back.” Top aides Secretary of State  Antony Blinken  and national security adviser  Jake Sullivan  repeated the mantra. Their implication? The Trump era’s unilateralism and tweet-from-the-hip chaos were over.

A statesman embracing diplomacy, however, is akin to a surgeon wielding a scalpel: The tool depends upon the skill of its operator. While the Biden administration embraced the traditional trappings of diplomacy, its members approached the strategy with all the skill of a narcoleptic, epileptic monkey high on crack.

Put aside Sullivan’s  curtailment  of maximum pressure on Iran as its foreign reserves circled the drain, Blinken’s lifting of sanctions on Yemen’s Houthi militia, or the Biden team’s waiver of sanctions on Nord Stream 2 in advance of Russia’s invasion of Ukraine. To understand just how weak American diplomacy appears both to adversaries and allies, consider Azerbaijan.

In December 2020, just a month after President Ilham Aliyev completed the first phase of Azerbaijan’s conquest of Nagorno-Karabakh, Andrew Schofer, the lead US diplomat on the crisis, traveled to Yerevan and Baku. Aliyev humiliated Schofer on live television, bragging about how Azerbaijan’s military prowess achieved what American diplomacy did not and then asking, “Why are you here?”

That episode should have colored Blinken’s approach to Azerbaijan when he entered office, but, alas, a willingness to tolerate Aliyev’s disdain for America came to define the Biden era.

The list of humiliation is long. When in June 2023 Azerbaijani snipers fired on a US Agency for International Development project in Yeraskh, killing an Indian worker, Blinken and USAID Administrator Samantha Power went silent.

Then, three months later acting Assistant Secretary of State Yuri Kim testified before the Senate Foreign Relations Committee that the United States would not tolerate any Azerbaijani military offensive. Days later, Azerbaijan ordered its drones and tanks across the region to erase the region’s 1,700-year embrace of Christianity. The US response? Crickets, even after it emerged that Aliyev had lied outright to Kim just days earlier about his intentions.

Well, not quite crickets. Power,  whose rise to power  came by criticizing the cynicism and immorality of past American inaction against genocide, responded with a visit to Armenia to lay a wreath at the genocide memorial. Rather than do so sincerely, though, she brought a camera crew with her to document her visit. As Armenians noted, however, USAID’s investment in public relations flacks to trail Power actually surpassed what Power had offered to the 120,000 starving citizens of the region during the 11-month blockade that preceded the attack. A designated terrorist group in Gaza got airdrops of food and medicine; indigenous Christians in Nagorno-Karabakh? Glossy head shots.

As criticism grew, Blinken and Power met with European counterparts to develop an aid package for Nagorno-Karabakh refugees. Alas, Blinken and Power earmarked much of the money for climate change and LGBT issues, hardly at the top of the refugees’ list. Aliyev responded as only dictators know how: He sent his forces deeper into Armenian territory.

When the State Department finds itself in a hole, Blinken digs. The same week that the Justice Department leveled charges at Rep. Henry Cuellar (D-TX) for allegedly corrupting his office on behalf of Azerbaijan, Blinken sent U.S. Ambassador to Azerbaijan Mark Libby to visit Shushi, an ancient Armenian city ethnically cleansed by Azerbaijani forces. Satellite imagery from after the guns fell silent shows Azerbaijan has continued to destroy churches.

As the French recalled their ambassador from Baku due to such outrages, the US ambassador today stands on the side of genocide and destruction of churches. While the French now establish a consulate in an Armenian region Azerbaijan seeks to annex, the State Department goes AWOL.

Just as British Prime Minister Margaret Thatcher warned President George H.W. Bush against the backdrop of Iraq’s invasion of Kuwait, “Don’t go wobbly on me now, George,” the French are showing Biden and Blinken the meaning of backbone. Unfortunately, in the face of aggression and gratuitous anti-Americanism, the Biden team is going full invertebrate.

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(The above article first appeared on May 9, 2024 in the Washington Examiner .)

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Pitch perfection: Alt-protein founders share tips for securing funding at Future of Protein Production event

06-May-2024 - Last updated on 06-May-2024 at 14:41 GMT

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During the “Startups in Action: Life in the Trenches” session, founders from across the alternative-protein space gathered to share tips and lessons learned on securing funding despite the difficult economic environment.  

‘Flip the pitch’ to focus on accomplishments, first-time founders might have to do more

Founders first and foremost need to establish credibility with investors, said Luiza Villela, founder of mushroom-based meat company unClassic. After finding investors would often question her expertise and knowledge of the alt-protein market, Villela changed her tactic to lead with her expertise in food science.  

"I used to do a lot of pitch competitions, and you get on stage, and you have all these people looking at you and already judging you from the onset ... [I] start off with [saying] 'hi, I'm a food scientist. I have been in the space for seven years. I developed products for a living, and this is my product’” Villela said.  

When seeking two rounds of venture-capital (VC) funding, alternative seafood company Aqua Cultured Foods found that it was crucial to not just talk about the market potential but to highlight the company's accomplishments and its talent, Brittany Chibe, the company’s co-founder and chief growth office explained. 

From first-time founder pitching to saying no to VC  

First-time founders and those who do not have a CPG background might also find a harder time securing the funding that they need to grow their business, noted Christie Lagally, CEO and founder at Rebellyous Foods. This often means that first-time founders will have to do extra work to get the attention of investors, she added. 

“When you are a non-traditional founder, you just have to do more and do a lot more ... I am not talking about emails. I am talking about actually pitching in order to really find those diamonds in the rough that actually understand what you are doing, even if it is the most boring thing that people could think to talk about.” 

Though many CPG startups rely on VC funds to grow their business, some founders rely more on angel investing — a high-net-worth individual who invests in exchange for brand equity — to grow a business, said Candice Choi, founder of seaweed snack brand Geem. 

“I do not think VC funding is a good fit for CPG. Therefore, I think angel investing is probably — friends and family — the best way to go for CPG products, especially ones that do not have anything super proprietary about it,” Choi said.  

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The Growth Equity Case Study: Real-Life Example and Tutorial

If you're new here, please click here to get my FREE 57-page investment banking recruiting guide - plus, get weekly updates so that you can break into investment banking . Thanks for visiting!

Let’s start with the elephant in the room: yes, we’ve covered the growth equity case study before, but I’m doing it again because I don’t think the previous examples were great.

They over-complicated the financial model (e.g., minutiae about issues like OID for debt issuances ) and did not accurately represent a 1- or 2-hour case study.

So, you can think of this example and tutorial as “Growth Equity Case Study: The Final Form.”

It combines the best examples I’ve received from students over the past 15 years and gives you a realistic idea of what to expect.

It’s an excerpt from our Venture Capital & Growth Equity Modeling course , so it’s not a step-by-step walkthrough – but it should still be quite helpful:

Types of Growth Equity Case Studies

Growth equity firms are “in-between” venture capital and private equity firms .

They invest when companies already have revenue (like PE firms), but they do so by purchasing minority stakes , holding them, and selling in an IPO or M&A exit (like VC firms).

Since growth equity is halfway between VC and PE, interviews and case studies are also a blend.

So, you could receive a financial modeling case study – as in this example – but you could also potentially receive a “qualitative” case study:

• Do some market research on Company X and explain why you would or would not invest, the risk factors, etc.
• Pretend we’re conducting due diligence on Company Y, and you’re calling their top 5 customers. What would you ask them, and how would you structure each conversation?
• How would you screen the market and use your network to find potential investments? Walk us through your thought process.

These topics are interesting but difficult to demonstrate in a video tutorial or article, so we’ll focus on the financial modeling case here.

What to Expect in a Growth Equity Case Study: Procyon SA

You can get the PDF document describing the case study, the blank and complete Excel files, and the video tutorial below:

• Procyon SA – Growth Equity Case Study Prompt (PDF)
• Case Study Walkthrough and Explanation – Slides (PDF)
• Growth Equity Case Study – Blank Excel File (XL)
• Growth Equity Case Study – Complete Excel File (XL)

Video Table of Contents:

• 1:16: Part 1: What to Expect in a Growth Equity Case Study
• 3:51: Part 2: Historical Trends and Revenue
• 6:16: Part 3: Financial Statement Projections
• 7:45: Part 4: Sources & Uses and Ownership
• 10:06: Part 5: Exit Calculations and IRR
• 13:41: Part 6: Investment Recommendation
• 15:24: Recap and Summary

In short, we must project this SaaS company’s revenue and financial statements, model primary and secondary share purchases , make exit assumptions, and recommend for or against the deal.

Specifically, should we invest €60 million at a pre-money valuation of €1.2 billion and €50 million at a €800 million pre-money valuation if we’re targeting a 3.0x multiple and 30% IRR?

Will the company use that money to achieve its growth targets or flush it down the toilet?

I would sum up the differences between VC, GE, and PE case studies as follows:

You are unlikely to get a detailed cap table exercise in a GE case study, but you could get asked about primary vs. secondary purchases, liquidation preferences, and participating preferred (the first 2 of which are covered here).

Like an LBO modeling test , the 3-statement projections and entry/exit assumptions are important.

But the unique feature is that, unlike VC and PE case studies, growth equity case studies often require you to forecast customer-level revenue , factoring in renewal rates, upgrades, and downgrades.

Growth Equity Case Study, Step 1: Historical Trends and Revenue Projections

We’re given the number of new customers each year, so we can use that information and the historical trends to forecast revenue.

But they do not exactly “give us” the historical financials – only the customer-level data :

So, we need to use Excel functions like SUMIFS to determine the number of customers that existed in both periods and the revenue difference they represented for the “Upsells and Price Increases, Net of Downgrades” formula:

You can use similar formulas to get the Average Annual Contract Value (ACV), the Retention Rate (Renewal Rate), and other metrics.

Once we have these numbers, we can plug in the # of new customers the company expects to win each year and make reasonable forecasts for the Churn Rate and Price Increases to forecast revenue over 5 years:

It’s also worth forecasting the sales & marketing spending and customer acquisition costs (CAC) so we can calculate some standard SaaS metrics, such as the Customer Lifetime Value (LTV) and LTV / CAC Ratio:

Growth Equity Case Study, Step 2: Financial Statement Projections

As in most 3-statement models , the Income Statement is simple, especially since we now have the revenue and sales & marketing numbers.

We can look at the COGS and the Operating Expenses as percentages of Revenue and follow historical trends to forecast and link them to the Income Statement:

If our assumptions result in the company reaching “breakeven profitability” too early or too late, we might revisit them, but they seem reasonable here (for more, see our coverage of the breakeven formula ).

For reference, the case document said to expect profitability by the end of the 5 years.

The Balance Sheet and Cash Flow Statement forecasts use a similar approach: make most items simple percentages of Revenue, COGS, or OpEx.

We mostly follow trends and extend them here rather than using median figures, but you could use either approach, depending on the numbers:

After linking these items on the statements, we see an immediate problem on the Balance Sheet: Cash turns negative!

Procyon is spending aggressively on sales & marketing, resulting in negative Net Income , a declining Shareholders’ Equity, and a negative Cash position.

That’s problematic, so they need €60 million from our firm.

Growth Equity Case Study, Step 3: Sources & Uses and Ownership Summary

We can set up the Sources & Uses schedule as follows:

Although we invest €110 million total, the ownership calculations are not based on this simple €110 million.

Normally, in a VC deal, the ownership equals the amount invested / post-money valuation – but only for a primary share investment (i.e., new shares get created).

So, for the primary share purchase here, the ownership is:

60 / (60 + 1200) = 4.8%

But the secondary purchase does not create new shares , so we do not add the €50 million of capital to calculate the post-money valuation for use in the ownership calculation:

50 / 800 = 6.3%

We add these together to get the total ownership of ~11%.

And yes, maybe we should increase the €800 million pre-money valuation in the secondary purchase to reflect the €60 million of new primary shares…

…but it makes a small difference, and we don’t know the sequence of events here.

We wouldn’t do this if the secondary purchase occurred first because it still would have been an €800 million pre-money valuation.

But the bottom line is that you should not worry about this detail in a 90-minute case study.

After doing all this, we link in the €60 million of equity proceeds from the primary purchase on the Cash Flow Statement, which flips the Cash balance positive:

Growth Equity Case Study, Step 4: Exit Calculations

Now, for the moment of truth: Do we achieve a 30% IRR and 3.0x multiple of invested capital in this deal?

There are two main issues to resolve:

• Revenue Multiple – The initial deal was done at an 8.3x trailing revenue multiple and 4.4x forward revenue multiple. What do we use for the exit multiple here?
• Liquidation Preference – The case document says the €60 million primary purchase has a 2x liquidation preference, but the €50 million secondary purchase does not. In other words, if €120 million exceeds what the primary stake is worth upon exit, we’ll choose to take the €120 million instead.

The revenue multiple is simpler: it decreases substantially over time, falling from the 8 – 12x range to the 5 – 6x range upon exit.

The company’s Year-Over-Year (YoY) growth rate is between 30% and 50% in these years, down from the 100%+ rate at the time of the deal, so its multiple should decrease.

These numbers also align with the revenue multiples for the smaller SaaS comparable companies on the “Comps” tab.

The Investor Proceeds uses a complicated-looking Excel formula to factor in the liquidation preference:

The idea for the first part of the formula is simple: compare the €120 million to the value of this 4.8% stake upon exit and take whichever is greater – as long as it’s less than the Exit Equity Value.

The first part, in words, goes like this:

MIN(Exit Equity Value, MAX(Liquidation Preference, Primary Ownership))

And then we add the secondary proceeds – but only if the exit equity value is above this €120 million liquidation preference!

If not, we get nothing for this 6.3% stake because the exit proceeds cannot even cover the liquidation preference.

Here’s the second part in words:

+IF(Exit Equity Value > Liquidation Preference, Secondary Ownership * Exit Equity Value, 0)

This is not a robust formula that handles all cases correctly, but it’s fine for a 90-minute exercise to get a rough idea of the results.

Specifically, this formula doesn’t correctly handle the case where the Exit Equity Value is very low but still above €120 million (e.g., €150 million).

In this case, we should add a separate condition, take the Exit Equity Value, and subtract the €120 million to calculate the proceeds that get multiplied by this secondary stake percentage.

But we skipped it to save time, and it barely changes the results in normal exit ranges.

Growth Equity Case Study, Step 5: Investment Recommendation

Normally, you consider the outcomes in different cases to make an investment recommendation.

We’re close to the IRR targets but a bit short of the money-on-money multiple targets in this baseline scenario:

We also need to ask if the company’s business plan is believable based on metrics such as the LTV / CAC.

The ~4x LTV / CAC here is not crazy, and while the entry valuation is quite high, it’s not unreasonable if the company grows by 7x over 5 years.

In a downside case , where the company’s new customer numbers are cut in half, and the exit revenue multiples are only 3 – 4x, we still achieve a 1.5x multiple with mid-teens IRRs:

This isn’t a great result, but it’s still above the minimum targets in the case document.

So, overall, we would recommend investing in this company.

If we care more about the downside risk, we might negotiate for a greater primary share purchase or a higher liquidation preference.

But if we care more about the upside, we might shift more capital to the secondary purchase – as the valuation is lower, but it lacks the downside protection from the liquidation preference.

Bonuses and Other Points

There is a bonus section on cohort analysis here, but we don’t have time to cover it in this summary.

However, an upcoming video or Knowledge Base article might walk through the topic.

In addition to this cohort analysis, you could get asked to conduct market or industry research or benchmark this company against its peers.

There isn’t much to say about these mechanically; use resources like the Bessemer Cloud Index and Capital IQ and FactSet if you have them.

The #1 mistake people make with growth equity case studies is over-complicating them and losing sight of what matters – such as the key drivers and the returns in different outcomes.

But if you keep those in mind, growth equity case studies should be some of the easier ones in interviews.

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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Man or bear? Hypothetical question sparks conversation about women's safety

Women explain why they would feel safer encountering a bear in the forest than a man they didn't know. the hypothetical has sparked a broader discussion about why women fear men..

If you were alone in the woods, would you rather encounter a bear or a man? Answers to that hypothetical question have sparked a debate about why the vast majority say they would feel more comfortable choosing a bear.

The topic has been hotly discussed for weeks as men and women chimed in with their thoughts all over social media.

Screenshot HQ , a TikTok account, started the conversation, asking a group of women whether they would rather run into a man they didn't know or a bear in the forest. Out of the seven women interviewed for the piece, only one picked a man.

"Bear. Man is scary," one of the women responds.

A number of women echoed the responses given in the original video, writing in the comments that they, too, would pick a bear over a man. The hypothetical has people split, with some expressing their sadness over the state of the world and others cracking jokes. Some men were flabbergasted.

Here's what we know.

A bear is the safer choice, no doubt about it, many say

There were a lot of responses, more than 65,000, under the original post. Many wrote that they understood why the women would choose a bear.

"No one’s gonna ask me if I led the bear on or give me a pamphlet on bear attack prevention tips," @celestiallystunning wrote.

@Brennduhh wrote: "When I die leave my body in the woods, the wolves will be gentler than any man."

"I know a bear's intentions," another woman wrote. "I don't know a man's intentions. no matter how nice they are."

Other TikTok users took it one step further, posing the hypothetical question to loved ones. Meredith Steele, who goes by @babiesofsteele , asked her husband last week whether he would rather have their daughter encounter a bear or a man in the woods. Her husband said he "didn't like either option" but said he was leaning toward the bear.

"Maybe it's a friendly bear," he says.

Diana, another TikTok user , asked her sister-in-law what she would choose and was left speechless.

"I asked her the question, you know, just for giggles. She was like, 'You know, I would rather it be a bear because if the bear attacks me, and I make it out of the woods, everybody’s gonna believe me and have sympathy for me," she said. "But if a man attacks me and I make it out, I’m gonna spend my whole life trying to get people to believe me and have sympathy for me.'"

Bear vs. man debate stirs the pot, woman and some men at odds

The hypothetical has caused some tension, with some women arguing that men will never truly understand what it's like to be a woman or the inherent dangers at play.

Social media users answered this question for themselves, producing memes, spoken word poetry and skits in the days and weeks since.

So, what would you choose?

Where Entrepreneurs Find Inspiration

Ideas and Research from Stanford University

VC Case Study: Dealing with a Disruption

What if an external event – say, a global pandemic – arrives as a VC is about to close a deal with a founder? Should the VC continue moving forward as if nothing happened, use the event as an opportunity to get more equity for the same investment, or simply postpone the deal? In this brief case study, Stanford professor of the practice Tina Seelig and Redpoint Ventures managing director Annie Kadavy explore that suddenly very timely question.

Video clips from: Venture Capital Decisionmaking [Entire Talk]

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Deep Tech Innovation [Entire Talk]

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A Pioneering Approach to Innovation

A process for innovation, essential questions before launch, the challenge of biology, reimagining and funding better treatments, the right move, the right speed.

The Possibilities of AI [Entire Talk]

Don’t Pursue the Obvious Ideas

When to be contrarian, is developing ai worth the money, the subtle dangers of agi, responsible ai deployment, global and equitable ai access, smart ai and society.

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