A useful VC interview memo makes the decision clear before it makes the company sound exciting. Explain what you know, what you are assuming and which next test could change your answer. Early evidence can justify another meeting without justifying an investment.
This is a free preparation exercise for early-stage investment roles. It is not a real deal recommendation or an employer's interview assignment. Firms differ in stage, sector, ownership and role responsibilities. Check the actual mandate before choosing a company or preparing a case.
A small dataset with a big claim
Imagine a fictional startup called RelayDesk. Its founder says, “We have ten customers and a $240,000 revenue run rate.” The underlying file shows ten signed pilot agreements, four organizations paying $2,000 monthly and two of those paying organizations using the core workflow every week. No renewal cohort has reached the end of its contract.
What can you safely write?
- Ten organizations signed pilot agreements.
- Four currently pay a combined $8,000 per month.
- Annualizing that paid monthly amount gives $96,000, if the current run rate persists.
- Two paying organizations are weekly active under the supplied definition.
- The dataset does not yet establish renewal rates or repeatable acquisition.
The $240,000 claim treats all ten pilots as paying at the stated rate. Your memo should flag the discrepancy and ask for reconciliation. Do not call it fraud based on this limited exercise; definitions, timing or missing records could explain a difference. The next step is to inspect agreements, invoices, collections and usage together.
“Twenty percent of all pilots are paying and active weekly” and “fifty percent of paying customers are active weekly” describe the same two organizations with different denominators. Neither is a proven retention rate. State the period and definition instead of choosing the more impressive percentage.
Write the decision in the first paragraph
An original practice opening:
Continue focused diligence before approving an investment. RelayDesk has an early paid-use signal, but the stated run rate overcounts paying customers in the supplied file. I would reconcile the customer records and observe deployments without founder support before concluding that the product can scale economically.
This gives the reader a recommendation, a reason and an action. It leaves room for the founder's explanation. It also distinguishes uncertainty from an automatic rejection.
Bessemer's analyst-program description includes sourcing, research and engagement with founders. That supports preparing evidence-based research artifacts, but does not establish a universal interview format. Verify current applications and deadlines directly; a public page can retain labels after a stated date has passed.
Find the cost hidden inside the demo
Suppose the four paying organizations generate $8,000 monthly revenue. Direct cloud costs are $2,000 and the support labor allocated to them is $4,000. Under these fictional cost definitions, gross profit is $2,000, or 25% gross margin. Excluding support labor would show 75%.
Ask whether the labor is one-time implementation, ongoing service or a mix. The answer changes the model. Founder-assisted pilots can be a useful way to learn, but unpaid founder time should not disappear from a normalized cost-to-serve estimate.
Do not extrapolate either margin forever from four customers. Test the next deployment and classify the work. A credible path to less support is a hypothesis until the product and customer evidence support it.
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The memo outline
Use the headings to expose the reasoning, not to fill a page quota.
| Section | What to write | What to avoid |
|---|---|---|
| Recommendation | Approve, decline or continue diligence, with conditions | Delaying the decision until the final line |
| Customer problem | Buyer, workflow, current alternative and cost of failure | An industry-size statistic without a buyer |
| Evidence | Paid use, source records and competing explanations | Treating demos, pilots and customers as interchangeable |
| Business economics | Price, direct costs, deployment and cash needs | Omitting labor because founders supply it |
| Fund fit | Check size, ownership, reserve needs and outcome scale | Assuming every good company fits every fund |
| Next test | A specific action and its decision consequence | “Do more diligence” without priorities |
If the assignment supplies a data room, use its information and respect confidentiality. If it is a public-company-selection exercise, label missing private information as unknown. Do not invent customer calls, founder access or an investment track record.
Recommended Resource
Venture Capital Recruiting & Interview Playbook
early-stage investing preparation with sourcing, pilot diligence, cap tables, financing terms, fund math and original interview simulations.
Check whether the outcome matters to the fund
Assume a hypothetical investor would own 8% at exit after future dilution. A $200 million equity exit produces $16 million before fees, taxes, preferences or other claims. That is 16% of a $100 million fund's commitments. It can be a useful outcome without returning the entire fund.
At the same ownership, generating $100 million of gross proceeds would require $1.25 billion of equity exit value. This is an arithmetic hurdle, not a prediction, an investment rule or proof that the company can achieve it. A complete decision must account for the check, follow-on investments, timing, risk and actual fund terms.
Preferred securities can change who receives exit proceeds. The NVCA model-document collection illustrates the range of financing agreements and warns that forms need tailoring. Do not assume that as-converted ownership always equals cash proceeds.
Defend the memo out loud
Practice three interruptions. “Why isn't this enough evidence?” should prompt a precise answer about customer definitions and deployment. “What would make you invest?” should produce observable tests, not a more confident version of the thesis. “What if another investor is moving?” should make you prioritize the unresolved questions and the actual deadline, without inventing urgency.
Keep a version history of the recommendation as evidence changes. Revising a view is useful when you can explain what changed. A polished memo that ignores contrary evidence is less useful than a short, traceable decision.
Choose the next practice task
If the distinction between pilots, customers and recurring revenue is still unclear, rebuild RelayDesk's table first. If you can explain it and want a fuller sequence, inspect the Venture Capital Recruiting & Interview Playbook sample. It adds sourcing and application work, cap tables, option pools, follow-on decisions, financing examples, fund returns and two original interview simulations. Its product page shows the current price and scope.
The product is a PDF, with no introductions, coaching, personal review or hiring guarantee. For companies with established customer cohorts and a minority-growth underwriting case, use the Growth Equity case preparation guide to identify the different work involved.
You can also browse VC jobs and internships, read VC application guidance, or compare the broader finance career paths. Choose a task that addresses the weakness in your work before buying more material.