Before the interview, conduct extensive research on the firm to gain an intimate knowledge of the company and the industry that will distinguish you from other candidates. Your answer to this interview question should showcase this knowledge along with your general enthusiasm for investing in young companies (and not mention at all the significant compensation associated with it).
This is your opportunity to convey your passion for early-stage company activities. If your answer focuses on a love of spreadsheets, you can forget about getting to the next stage. Instead think of what about seedling companies gets you fired up. Project that energy and those points and you will connect with the interviewer. In addition, point out how the particular firm you're interviewing with fits into your desired career path and why your background would be ideal for this firm. (Read more about the relationship between an employee and their firm in Fitting In At Your Firm.)
2. What are some recent developments in our industry?
Venture capital firms seek employees with proven expertise, often in a particular industry in which the firm focuses. You should not only showcase your knowledge of the overall developments and trends in the industry, but also elaborate on the specific influences currently affecting the market. Demonstrate knowledge that only an experienced industry insider would have. Discussing a particular company's product release or strategic decision would be a great method to do exactly that. (Read more about how companies differentiate themselves from the competition in Competitive Advantage Counts.)
3. What has been the most interesting IPO or acquisition in our industry in the past year?
This question provides ample opportunity for you to shine. Study the ins and outs of an initial public offering (IPO) that relates to the venture capital firm's niche interests and prepare your analysis. Discuss the potential you see for the company and how it could strengthen its market position. Treat this question as a test of your industry knowledge and an opportunity to impress your interviewer with thoughtful analysis. This research will also help you later when proving to clients you understand their field and where they can go post-acquisition. (For related reading, see The Murky Waters Of The IPO Market.)
4. What blogs/columns do you read?
The venture capital world is a highly connected one where networking is key - especially if you are trying to bring new deals to the table. Subsequently, some prominent venture capitalists publish personal blogs highlighting their perspectives on recent deals, upcoming IPOs and general industry commentary. Reading these blogs can give you insight into the current thinking and new developments in the industry. Staying in tune with the blog conversations shows the interviewer that you are highly connected and have your finger on the industry pulse. (Read more about how traders interact online in Taking A Trip To Trader Town: Exploring The Trader's Chatroom.)
5. Where do you see yourself in five years?
While this is a question that an interviewer in any industry would ask, at a venture capital job interview, you should answer this question by stating your intention to eventually become a general partner of the firm. You want to give the impression that you are a dedicated individual who seeks long-term commitments. Explain that you will earn your promotions by letting the results of your work speak for themselves. Be ready to answer the follow-up question, "What results can we expect from you?" and use a professional success story to illustrate what you bring to the table.
6. How would you evaluate a possible portfolio company and its business plan?
Emphasize your ability to look beyond the numbers and read between the lines. Evaluating financial facts is much different than forecasting revenue…