Quarrow — B2B Marketplace Investment Exercise
An 8-hour Venture Investment Exercise case study with a complete model answer
Modeled After
Greenoaks
The three-question open exercise Greenoaks is reported to set — long-term margins, industry implications, and a valuation built from scratch — supported by a single firm-provided cohort dataset of intentionally imperfect quality, with everything else sourced by the candidate.
Structure and exercise format are modeled after Greenoaks — the take-home exercise format the firm is reported to use. The company, the financials and every figure in this case are entirely our own.
The Situation
Quarrow Freight Exchange, Inc. runs a digital freight marketplace.
Quarrow Freight Exchange, Inc.
- Sector
- B2B marketplaces: digital freight brokerage, with a transaction take rate on shipper freight spend and a platform services business sold to the same shippers
- Size
- Geography
- United States, running full truckload freight over a carrier base in which the great majority of capacity sits in fleets of ten trucks or fewer
- Ownership
- Situation
The Prompt
The seat you are interviewing for is at a fund that holds its positions across years, not across quarters. The exercise arrives by email on a Friday afternoon with a short note:
"Quarrow.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
Shipper transaction extract (data-1.xlsx)
Blank modeling template (template.xlsx)
Market and third-party data (given in the template)
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 480 minutes.
PART 1
Build the per-load economics bridge, and find both plugs
PART 2
Say which denominator you are quoting, and print both
PART 3
Decompose net new volume into expansion and land
PART 4
Build the size from the market down, and validate the method
PART 5
Make the forecast pay for itself in land
PART 6
Bridge today's margin to the steady-state one, and value it
PART 7
Sensitize on business drivers, not on the discount rate
PART 8
Say what is wrong with the file you were given
PART 9
Answer the industry question with a counterfactual
How to Approach It
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished memo and Excel model are in the solution set below.
- 0:00 – 0:45
read everything, and audit the file before you use it
- 0:45 – 2:00
the per-load bridge
- 2:00 – 3:15
the cohorts
- 3:15 – 4:30
the top-down build
- 4:30 – 6:00
the discounted cash flow
- 6:00 – 6:30
sensitivities
- 6:30 – 8:00
write it
Key Concepts
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
Take rate
The share of the volume flowing through a marketplace that the marketplace keeps as net revenue. It is the reason a margin quoted on revenue can mislead here: net revenue is itself a take rate, so a margin struck on it moves when the take rate moves even if nothing about the underlying economics has changed.
Gross transaction value
The total value of freight transacted through the platform, before the marketplace's own cut. Quoting margins in basis points of gross transaction value rather than as a percentage of net revenue is what makes a marketplace's economics comparable across periods and across peers.
The plug
The residual line of a bridge, arrived at by subtraction rather than by assumption. It carries the argument: an exhibit that never says which of its lines was backed into has published an assumption under the heading of an output.
Land versus expansion
Net new volume in any period is what existing cohorts spend beyond what they spent last period, plus what an entirely new cohort brings. Separating the two is what turns a growth rate into a statement about the business, because the two are bought with completely different resources and fail for completely different reasons.
Gross transaction value retention
A cohort's volume in a later period as an index of its volume in the period it landed. Above one hundred it is expansion rather than churn, which is the normal shape for a B2B marketplace: a customer that starts with one lane moves more of its spend onto the platform as the service proves out.
Implied land
The volume a forecast requires a new cohort to bring, computed as the forecast less what the existing cohorts deliver on an assumed retention curve. Treating land as an output rather than an input is the only construction in which a cohort model can disagree with a top-down forecast.
Upper-triangular panel
A cohort dataset in which a cohort landed in period k has at most N minus k periods of observed activity. It is not a flaw but it is a hard constraint: the number of cohorts that support a full first-year retention figure is far smaller than the number of cohorts in the file, and saying how many is more useful than the figure itself.
Terminal normalization
Restating the final forecast year's cash flow onto the basis that actually persists in perpetuity. Where a working-capital drag scales with the CHANGE in volume, carrying the last forecast step into a perpetuity charges the business a cost it only incurs while it is growing quickly, and the error compounds through the whole terminal value.
Counterfactual reasoning
Reaching the implications by describing the world with the thing removed from it, instead of listing effects.
What Makes It Hard
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: memo and Excel model, built the way a banker would actually build them. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —Take rate and gross transaction value build
- —Land versus expansion cohort decomposition
- —GTV retention by cohort
- —Working with a deliberately imperfect dataset
- —Two-way sensitivities on business drivers
- —Counterfactual industry analysis
Memo
The written recommendation and how it was reached
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the memo, the Excel model and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and Memo (PDF), yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Quarrow — B2B Marketplace Investment Exercise
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
Frequently Asked Questions
Is this a discounted cash flow exercise or a cohort exercise?
Both, and treating them as two jobs is the error. The cohort work does not produce a valuation on its own; it produces a judgment on whether the top-down forecast the valuation runs on is achievable. If your cohort table and your discounted cash flow are two separate answers, you have built two models rather than one, and a reader will find the seam.
How much of the eight hours should go on the model?
Less than you think. The note rules the state of the model out of the grading and leaves the memorandum as the thing being handed in. Given the choice, hand in the crude model that admits it is crude and leaves the argument open to being disproved, rather than the immaculate one trailing two pages of hedging.
What do I do about the flaws in the supplied file?
Name each one, state the inference and the treatment, and say what the treatment cost you. The temptation is either to clean the file without saying so or to complain about it in general terms. Both are wrong. A specific ambiguity, a stated inference and a proportionate decision is the whole of what this part of the exercise rewards, and a candidate who fixes the file without ever saying what was wrong with it has done half the work.
Should I fit the retention curve on the average of the cohorts?
You should decide, and then say why, because it is the judgment the rest of the exercise rests on. The observed first-year steps are not flat, and the direction they move in is a fact about the business rather than noise. Averaging over a trending series is a choice with a name, and the sensitivity you owe the reader is the one that prices the difference between your anchor and the alternatives.
Which matters more, the take rate or the volume?
Compute it rather than asserting it; one grid answers it. Then say something about believability as well as magnitude, because the two do not point the same way. One of the two is a claim about a market that third-party data can check. The other is a claim about what the company can keep out of its customers' spend, and nothing outside the company can test it.
Do I need to charge stock-based compensation?
Make the call, and put it on the page whichever way it goes. The market quotes this company on a measure that excludes it. If you value it on the same measure without saying so, you have valued a company that never pays for the equity it issues, and on a business at this stage that omission is worth several dollars a share.
Is there a leveraged buyout in this case?
No, and a candidate who imports one has not made a small error, they have answered a different question. Nobody is sponsoring anything here, so acquisition debt, a cash sweep, an exit multiple and a returns bridge all have nothing to attach to. With no debt anywhere on the balance sheet, deleveraging cannot account for a dollar of anything. The question is what steady-state margin structure the business supports and what that structure is worth.
Is this format still used?
Yes, and it travels: of the long-only and growth formats this one comes closest to what covering a freight name involves once you have the seat. What the firm sends is three open questions and one dirty extract, and what it reads back is how you picked what was worth knowing, where you stopped, and what you were willing to sign.
About This Venture Investment Exercise Case Study
Venture Investment Exercise case study for venture & growth interviews. 8-hour format covering take rate and gross transaction value build, land versus expansion cohort decomposition, GTV retention by cohort. Includes the full prompt, a written memo, a tied-out Excel model and an audio walkthrough.
This case study sits in Venture & Growth, under Investment Exercises. Every case ships with the full prompt, the supporting materials and a complete model answer, plus an audio walkthrough of the judgment behind the recommendation.
480-Minute Format
The time limit a real assessment would give you
Memo
Included in the model answer
Excel Model
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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