Growth Equity Interview Questions: Full List, Answers, and Differences vs. Venture Capital and Private Equity

This site has already covered investment banking interview questions, private equity interview questions, and venture capital interview questions, so the next topic on the list seemed to be growth equity interview questions.

Most online coverage says, “Growth equity is a mix of private equity and venture capital, so expect interview questions from both those fields.”

That description isn’t wrong, but there’s a bit more to it than that:

Growth Equity vs. Venture Capital vs. Private Equity

You can use our “case study diagram” for these fields to understand what to expect on the technical side:

But interviews are not just case studies; they’ll also ask about qualitative topics, your previous work experience, etc.

A map of “interview question categories” might look like this:

The categories are the same for each field, but their relative importance differs.

Fit/background questions, such as walking the interviewer through your resume, are important in all interviews, so they receive equal weight here.

However, “markets and investments” questions are most important for VC interviews, less important in GE, and even less important in PE.

The same goes for “firm and process” questions, though some would argue they’re of the same importance in GE.

Deal and client experience is the opposite: PE firms really care about this point and want to see substantial transactions, but early-stage VCs care less, and GE firms are in the middle.

Technical questions, case studies, and modeling tests also follow this pattern: They’re the least important in venture capital and the most important in private equity.

But you’re probably here for the specific questions and answers in each category, so let’s get started:

Growth Equity Interview Questions: Fit & Background

They still ask the same questions in growth equity interviews; the difference is that you need to shift your answers slightly and avoid making it sound like growth equity is your “backup plan.”

Q: Walk me through your resume.

A: See our guide and examples for the “Walk me through your resume” question and the article on how to walk through your resume in buy-side interviews.

To add a growth equity spin, you can talk about wanting to understand operations and unit economics to evaluate companies.

Reference any deals you’ve worked on that required analysis of these points and talk about how they affected the valuation or client’s decisions (this is more grounded than just saying, “I like high-growth companies!”).

Q: Why growth equity?

A: You like industries such as tech and healthcare, you like to understand markets, unit economics, and operations, and you want to invest in high-growth companies that need capital.

If the firm requires a lot of sourcing, you can also point to that as a positive and say that you like reaching out to companies and “selling” your firm.

If you haven’t worked with high-growth companies in banking or consulting, think of other cases where you had to do a deep dive into a company’s operations or economics to build a model or make a recommendation and use this to support your interest.

Q: What are your strengths and weaknesses?

A: This is a common question, but there isn’t much unique to growth equity.

Communication/presentation skills and technical/modeling/deal skills are all quite important, but “sales skills” are also crucial if you’re interviewing at a firm with significant sourcing.

For weaknesses, you could list anything that’s a legitimate weakness but also not critical for junior-level roles: Maybe you’re not great at delegating tasks, you take too long to make decisions, or you don’t always speak up if another team member has overlooked something.

You probably don’t want to mention weaknesses related to balancing your time or multi-tasking because growth equity requires many of these skills.

Q: Why not go into private equity, venture capital, or startups?

A: You’re not interested in private equity because the types of companies they acquire are not that interesting to you – you want to invest in high-growth tech/healthcare companies rather than large/mature firms, HVAC businesses, or restaurant chains.

Early-stage VC is also less interesting because you want to close deals rather than pass on almost everything, and you want to take what’s already working and improve it rather than betting on companies with almost no information.

And you don’t want to join a startup because you want a mix of finance, sales, and operations skills – but you normally get “siloed” into just one of those at normal companies.

Q: Why our firm/group?

A: Research the firm or group beforehand and talk about their focus industries and deal types, how they match your background, and anyone you’ve met there:

“I’m interested in your firm because you focus heavily on vertical SaaS companies that need capital to ramp up their sales & marketing efforts, and I’ve had experience working on similar deals, such as with the [Company Name] IPO in insurance software. I also like everyone I’ve met here, such as [Names], and would fit in with your culture.”

Growth Equity Interview Questions: Markets & Investments

These questions could span a huge range because they could ask you about anything from the current fundraising environment to the IPO and M&A markets to specific markets their portfolio companies operate in.

However, this category is probably less important than in VC interviews simply because GE interviews can be a lot more technical, which means less time for these questions:

Q: Pitch me a vertical market within tech that we should invest in.

A: For this question, you need to point to high growth rates and specific qualitative factors that make it more likely for companies to succeed:

“I like the ‘pet software’ market, which includes everything from telemedicine for pets to health tracking apps, adoption platforms, and software for automating veterinary practices. It’s already a multi-billion-dollar market and is projected to grow at 10 – 15% annually over the next decade.

Pet ownership rates have been rising faster than overall population growth, and adoption rates are likely to increase as the population ages and the older cohort can no longer care for pets effectively. The vet software market is highly fragmented, and many PE firms have been acquiring local firms and aiming to boost their efficiency, so there is a big opportunity to sell automation software and other tools to win and retain customers.”

Q: What are some current trends in the fundraising and exit environments for growth companies?

A: This answer changes from year to year, but if you are answering this in 2024, you might cite points such as:

• Fundraising Still Down – GE fundraising has been falling for the past few years after reaching an all-time high in 2021; it’s now back to pre-COVID levels, as higher interest rates and an unclear economic outlook have dampened expectations.
• Performance and Valuations – PE and VC funds raised in the 2011 – 2020 period have performed decently over the past few years (median IRRs of 15 – 20%), but growth equity has been lower, with a median closer to 10%, likely because there was a much bigger valuation reset in the late-stage funding market and a big drop in exits.
• Exits Up Slightly But Still Poor – M&A activity has ticked up modestly, but the IPO market is still mostly shut. Some promising growth companies like Klarna have filed to go public, but people are still waiting for a full recovery.

Q: Pitch me a growth company that we should invest in.

A: With this one, you need to find a few public companies with high growth that also roughly match the firm’s target sectors/strategies.

Don’t even bother researching private companies because it’s hard to find detailed financial information.

The example here (Smartsheet) is too big for most GE firms, but it might be appropriate for PE mega-funds that do large growth deals:

“I would invest in Smartsheet, a SaaS workflow and project management company with just over $1 billion in revenue and a $7.8 billion market cap that trades at 7x trailing revenue on expected revenue growth rates of 15 – 20% and projected EBITDA margins of ~20%. Although it is a crowded space, Smartsheet seems to have the best tools with the highest organic adoption rates, and demand will only increase as AI agents require more ways to interface with data.

Historically, the company has grown revenue at 40%+, and the consensus estimates may understate their projected growth due to a few recent quarters with lower numbers. A growth equity investment could boost their sales & marketing efforts and potentially even give them capital to acquire smaller competitors, such as Asana or Airtable.”

Growth Equity Interview Questions: Firms and Deal Processes

I would rate this category as “moderately important” because you need deal experience for growth equity but deals still tend to be simpler than in private equity.

Q: What do you look for in a typical growth equity investment?

A: The most important qualities are:

• High Organic Growth – If the company is not growing by at least 20 – 30%, it’s probably not a great growth equity candidate unless there are tons of cheaper/smaller companies to acquire.
• Plausible Unit Economics – Many growth companies lose money early on, but there must be a path to profitability. If the company can’t even make money on each unit sold (i.e., healthy gross margins), this will be very difficult.
• Specific Uses of Capital – The company must need capital for very specific growth initiatives, such as expansion into Region X, more sales reps for Industry X, or New Product Z.
• Solid Management – The management team must have a track record of working together over many years to grow at high rates; you don’t want to see a lot of turnover or mostly new hires.

Notice how “price” and valuation are not on this list.

Yes, they still matter, but they’re less important than in PE because no matter what you do, the company’s valuation multiples will probably fall over time (see below).

Q: Which portfolio company of ours would you have invested in? Why?

A: Most of your argument here should come down to “Higher-than-expected growth”:

“I would have invested in Athletic Brewing, which you led a $50 million equity round in at an $800 million valuation. The company is a leader in the nonalcoholic beer market, with almost 20% market share currently.

The market is expected to grow at ~10%, but Athletic Brewing is growing at closer to 30%, so it’s in the top position in a market with very low penetration in the U.S. Younger generations are increasingly not drinking alcohol, so there’s huge growth ahead as they age. If the company executes well, it could easily reach $250 – $300 million in sales over the next 5 years, up from $90 million at the time of the deal.”

Q: How are growth equity deals structured differently than private equity or venture capital ones?

A: Unlike most PE deals, traditional growth equity deals do not use debt and are for minority stakes in companies, but they often have more “structure” via liquidation preferences and preferred stock.

Unlike early-stage VC deals, many growth equity deals tend to use structures such as participating preferred or more aggressive liquidation preferences to reduce their downside risk if the company sells for a low price or its growth disappoints.

Q: You’re conducting a “mock cold call” with the CEO of a potential portfolio company.

How would you introduce our firm and set up a follow-up call?

A: You would start with a very short introduction (1 – 2 sentences) that gives your firm’s name, capital under management, and recent deals you’ve done, and say that you’ve been impressed by this company and want to learn more.

Start by assessing whether the company needs funding and has the characteristics your firm seeks (industry focus, business model, etc.).

You don’t want to ask super-detailed questions initially; keep it more open-ended and try to get a rough feel for the company and its leadership.

When the call ends (target ~15 minutes), thank them for their time and offer something for a follow-up call or meeting, such as trading your data on their market or even introductions to potential partners/suppliers/customers (but only if you can legitimately do it).

Q: Walk me through one of your deals and explain whether you would have invested in the debt or equity offering or acquired the company.

A: This question is not specific to growth equity and could come up in virtually any buy-side job interview, so please see the guides to deal discussions and the deal sheet in interviews.

Q: Is cap table analysis still important in growth equity, as it is in venture capital?

A: Cap tables are still important, but less so than in VC because growth equity firms are later-stage investors in companies, which means they invest closer to the eventual exit.

Therefore, they’re less likely to be significantly diluted or “outranked” between their investment and the exit (unlike Seed or Series A investors).

So, they’ll still use terms liquidation preferences and participating preferred to reduce their downside risk, but they don’t care quite as much about other investors unless there are deal terms from previous rounds that keep “carrying through” to impact them.

Growth Equity Interview Questions: Technical Concepts

As with private equity interviews, they could potentially ask you about anything: Accounting, equity value and enterprise value, valuation and DCF analysis, and even merger models and LBO models.

That said, you are most likely to get a mix of basic accounting/valuation questions, some IRR math questions, and a few growth/VC-specific questions:

Q: Why are liquidation preferences common in growth equity deals? What makes them tricky in models?

A: Liquidation preferences are common in GE deals because investors want to reduce their downside risk in case the company raises a late-stage round at a $1 billion valuation but then sells for $800 million (for example).

A 1x liquidation preference guards against this and lets the late-stage investors at least recover their invested capital if there’s a disappointing exit.

In models, liquidation preferences can be tricky because you must recalculate each investor group’s common equity ownership based on whether they convert to common shares or stay in preferred.

Q: Suppose that a GE firm invests $150 million in a growth company. It first purchases $40 million of secondary shares at a $400 million pre-money valuation and then purchases $100 million of primary shares at a $500 million pre-money valuation.

Explain how the Equity Value, Enterprise Value, and ownership change.

A: In the first deal – the secondary purchase – the Equity Value stays the same at $400 million because no new shares are created. The GE firm purchases existing shares, and the company does not get any Cash. The GE firm now owns $40 / $400 = 10% of the company.

We don’t know what Enterprise Value is, but it stays the same at this stage because Net Operating Assets do not change.

In the second deal, the post-money valuation is $500 + $100 = $600 million, so the Equity Value increases to $600 million. Enterprise Value stays the same because the $100 million of new Cash offsets this change.

The firm acquires a $100 / $600 = ~17% stake in the company, so it now owns ~27% total.

It’s not just 23%, or $140 / $600, because it purchased the secondary stake at a lower valuation.

Q: Explain the IRR math in a traditional growth equity deal based on a minority stake investment vs. a leveraged buyout.

A: In a traditional growth equity deal, multiple expansion and debt repayment are highly unlikely, which immediately eliminates two common returns sources in deals.

Multiple expansion is unlikely because the multiple usually falls as high-growth companies mature and experience slower growth.

So, most of the returns will have to come from EBITDA growth, with a small amount coming from Cash generated during the holding period (if any).

The returns sources might be more diversified in a traditional LBO or a growth buyout deal.

Q: You purchase $100 million of primary shares in a growth company at a $900 million pre-money valuation. The company’s revenue grows from $100 million to $400 million over 5 years, but its revenue multiple falls by 50% when it is sold in Year 5.

What is the approximate IRR? Assume that Cash = Debt in both the initial deal and the exit.

A: You initially acquire a $100 / ($100 + $900) = 10% stake in the company. If Cash = Debt, Enterprise Value = Equity Value, so the Enterprise Value is $1 billion, and it’s a $1000 / $100 = 10x revenue multiple.

If the revenue grows to $400 million over 5 years and the revenue multiple falls to 5x, the Exit Enterprise Value is $2.0 billion. If Cash = Debt, this is also the Exit Equity Value.

You still own 10%, so you earn $200 million in proceeds.

A 2x multiple over 5 years is a 15% IRR.

Q: How would you value a $50 million revenue SaaS company growing revenue at 30% per year?

A: You can still use revenue multiples based on comparable public companies (or EBITDA or UFCF multiples if the company has positive metrics for those).

You could still use a DCF, but it would have to go far into the future (e.g., 10 – 20 years) so that the growth rate can fall to a much lower level by the end.

Q: Why would a GE firm use convertible preferred stock in a deal rather than a simple liquidation preference on the preferred stock?

A: Convertible preferred stock and preferred stock with a liquidation preference are similar because both provide downside protection with equity upside if the deal does well.

The main differences are:

• Accrued Dividends – Convertible Preferred usually has an accrued dividend that effectively increases the amount owed back to investors each year, so investors could “lock in” something like a 10% or 12% annualized return. A 1x liquidation preference does not offer this (though some types of non-convertible preferred stock may include it).
• Seniority – This needs to be spelled out in the term sheets, but convertible preferred stock could potentially be senior to the other preferred stock from VC investors (or vice versa). This can have implications in “borderline” exit scenarios.

Growth Equity Interview Questions: Case Studies

We covered growth equity case studies in a separate article and video tutorial, so please refer to them for an example.

The format there is a common one: A 3-statement model with IRR calculations and customer/unit economics included.

But you could also get a more qualitative case study about analyzing a market, conducting due diligence, or screening for potential deals.

Traditional LBO models are also possible because many growth equity firms now do “growth buyout” deals as well.

A pure valuation or M&A modeling exercise is less likely because these skills are less relevant in growth equity.

How Do You Prepare for Growth Equity Interview Questions?

The good news is that, unlike venture capital interviews, you can do a lot more preparation for growth equity interviews since they test more predictable technical topics.

The bad news is that this means they expect you to do more prep work, and standards for technical questions are higher.

If you have 10 hours to prepare for a growth equity interview, I suggest:

• 2 Hours: Prepare your story, “Why growth equity,” strengths/weaknesses, why this firm, and other fit/behavioral answers.
• 2 Hours: Research a market and a specific company you want to pitch and quickly review the firm’s portfolio.
• 3 Hours: Do a quick review of accounting, valuation, cap tables, and simple IRR math, testing yourself with quizzes or interview questions.
• 3 Hours: Practice with any growth equity case studies you can find.

Ten hours is not much time for everything above, but it can work if you already know the concepts.

If that’s the case, preparing for growth equity interview questions is more like watching the highlight reel than kicking off a new game.

More About Growth Equity

If you want to learn more about growth equity, a few related articles and case studies include:

• Growth Equity Overview
• The Growth Equity Case Study
• Venture Capital Interview Questions
• The Venture Capital Case Study
• Private Equity Interviews