PS#046: The Interview Series – How to Use Law Firm Data

Alright, now that I’ve let you in on the secret and showed you the power of law firm data, let’s talk about how we can use it in the interview process.

First, if you haven’t read my ​3-Step Guide to VC interviews​, give it a quick read. As I mention in the article (and will continue to mention), you’ve got to find a way to stand out in these interviews (especially if it’s an actual process).

VC interview processes are highly competitive and usually ask relatively generic questions. That means that most candidates are saying more or less the same thing. It’s not that they are wrong, but they aren’t standing out amidst the crowd.

Leveraging the insights from law firm data can help you separate yourself from the crowd.

Let’s talk about how we’d use this data to answer three common interview questions.

What are some key trends in venture right now?

Right off the bat, we know the law firm databases are going to help us here.

If you’re looking through the reports I mentioned in the ​previous issue​ of Preferred Share, you’ll see all sorts of options, such as…

• Levels of activity for different stages

• Geographic shifts for venture investments

• Terms for priced rounds, convertible notes, etc.

• Time to IPOs or M&A exits for venture-backed companies

• Tying together historical trends (i.e., today’s environment is reminiscent of X)

Clearly, there are a lot of options.

To best prepare yourself, review as many of these reports as possible, and pull out a key trend for each of the following…

• Fundraising environment for VC-backed companies

• Investment activity (by stage, geography, and/or industry)

• Venture financing deal terms (e.g., priced, notes, SAFEs, etc.)

• Trends or recent activity around IPOs, M&A exits, or liquidity events

With data to back it up, you’re going to show the interviewer that you know (1) what to look for in the market, and (2) where to look for it.

What market do you think is over or undervalued?

This will require a bit more work than just leveraging the venture capital reports, but they can provide the evidence you need to really make the case.

Based on your theses or market research, identify a space that you believe is currently ripe for investment opportunities.

Side note: if you choose an obviously hot space, you won’t really be differentiating yourself.

Once you have that space, see if the law firm data can help support your thesis. For example, if it’s a specific industry, look to find financing industry data over time. It could show that this market is currently not getting a ton of attention from investors (lowering the competition). Another example is to splice the data by stage, maybe the opportunity lies at a certain part of the investment lifecycle. Maybe the opportunity lies at the cross section of multiple data points.

Whatever the choice, see if the data backs it up. If it does, this is something that you can use to show that you’ve really done your work on a space.

What VC resources do you read?

A very common question from VCs.

Essentially, they want to understand where you’re getting your information from? What are your data sources?

Most will provide the typical books and newsletters.

Very few will highlight the venture capital reports provided by [law firms] on a quarterly basis. If you can pull out key sections that you find valuable (that are relevant for the investor), even better.

There we go. Another few ways to stand out.